Taking Care of Married Children After You Are Gone
Planning for your children after your death is something that weighs on the mind of many parents, even if those children are adults and married themselves. While wanting to ensure your children are financially secure, you also may be wary about how to take care of your children without inadvertently giving money to their spouse, especially if the marriage is in trouble.
This, however, gets really tricky depending on when you give your adult children money and how they choose to spend that money. California is a state in which any property acquired during the marriage is considered half owned by each spouse, but there are exceptions for inheritances. Inherited property in California can be considered separate and belonging to one spouse, if they do not place it in a joint account or spend it on a joint purchase. For example, if your adult child chooses to use their inheritance money towards buying a house with their spouse, if they divorce that money will count as a joint asset. This is called comingling. The money can also never be placed in a joint account with their spouse, which could create awkward conversation in the marriage.
How can you protect your child’s inheritance from their spouse?
Keeping Money Separate or a Prenuptial Agreement
One way in which the money is not subject to a divorce settlement is if the money is kept separate. Your child can also have a prenuptial agreement that specifically mentions the inheritance. This may or may not be an option in your child’s situation, however, and can create tension.
Lifetime Inheritance Trust
This is the best solution to protect your adult child that is currently married or will be getting married in the future. Instead of having to have a prenuptial signed, which may create conflict before the marriage begins, a lifetime inheritance trust leaves an inheritance to each child as a trust and they will be the trustee of their trust. The trust owns the property and inheritance instead of the child. This makes a huge difference in a divorce settlement. Your child’s spouse will have an extremely difficult time ever getting the inheritance included in any divorce settlement. The lifetime inheritance trust will also act as a deterrent because it would be costly to have a hired attorney try and get the trust included in the divorce settlement.
Another benefit of the lifetime inheritance trust is that it protects your adult child from more than a messy divorce. It will also protect their inheritance from being involved if they are sued for any other reason as well, such as in a business dispute or an automobile accident.
When you are planning your affairs, be sure to ask your attorney about how best to protect the inheritance of your adult children, especially if they are married or plan to be married.