Estate planning around your child’s partner is concerning for many parents. Shielding your assets from your child’s spouse in the event of divorce is possible and can be a part of your estate plan. The reasons for wanting to shield your assets from your child’s spouse are varied and packed with emotions and feelings. Some parents wish to pass their property down within their own bloodline. Other parents themselves are also divorced and worry about how their child’s inheritance may wind-up down the road if there is a divorce or a new family in the picture. And some parents, even after years of their child being married, still do not like their spouse.
It is upsetting to a child when his or her parents disapprove of their spouse. Some families are discreet about their true feeling, while others make it well-known. No matter where you fall in the spectrum of possibilities, there are ways to prepare your estate plan that may take away some of your worries that your child’s inheritance will be squandered away when you die because of his or her relationships while avoiding the emotional time-bomb of revealing your true feelings about your child’s spouse to your child.
The most effective way to shield your assets from your child’s spouse is to have your child and his or her spouse enter a prenuptial agreement before they get married. While this may be the best solution, it is also the most emotionally charged and wrought with difficulties. If you push to hard, legally, it may be a ground to invalidate the prenuptial agreement, because such agreements need to be voluntary to be enforceable. Trusts are an emotion-free method to communicate and exercise your feelings about your child’s choices without articulately them to all who would here.
Creating a lifetime trust for the benefit of your child, regardless of partner or spouse, is a good method to protect your assets from your child’s partner in the event of your child’s divorce or death. A trust adds a layer between the asset or gift and your child, restricting the permissible beneficiaries to your child only.
You are also able to define the permissible uses of the trust property. You can allow trust proceeds to be used for health, education, or maintenance purposes. Allowing trust property to be used by your child so that he or she can live in reasonable comfort is also permissible. Trusts can defer decision making to a trustee to exercise discretion as to when and in what amounts to make distributions. Trust proceeds may also be distributed in stages, like by your child’s age and for any distribution amount.
You can also prevent your child’s creditors from invading the trust for payment of your child’s debts by prohibiting the use of any of the trust proceeds for the payment of debt. For children with problems managing their money, this provision ensures that your grandchildren can access your trust funds upon the death of your child.