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How trusts help married adult children protect their inheritances

On Behalf of | Jun 21, 2024 | Estate Planning |

Most parents choose to leave inheritances for their own children, not their in-laws. Even those who come to love their sons-in-law and daughters-in-law do not view them in the same way that they view their own progeny. There’s always the possibility that a married child could eventually divorce and the in-law who receives an inheritance is no longer part of the family.

Therefore, many parents with adult children who have already married leave assets for their children with the expectation that their child, not their son-in-law or daughter-in-law should have control over those assets when they die. Some parents go so far as to create trusts to protect their adult children from the risk of losing inherited property if they ever divorce in the future.

Inheritances should be separate property

In theory, an inheritance received from one’s parents is among the assets that a spouse can claim as their separate property should they ever divorce. Inherited resources and other gifts typically are not part of the marital estate.

If someone divorces, they don’t have to share their inheritance with their spouse. However, if there has been any commingling of marital resources, then the inheritance could be at risk. Actions that married individuals take after inheriting property could put those resources at risk if they divorce later.

Depositing financial resources into a shared account Might put them at risk of division in the event of a divorce. The same is true when someone adds their spouse to the title paperwork for a sizable asset or the account for financial resources. Anytime the non-inheriting spouse can reasonably claim that they had full access to and control over inherited property, they could try to seek its division in divorce proceedings.

The use of a trust to control inherited resources is a way to protect those assets if beneficiary children ever divorce. Assets held in a trust do not belong directly to a beneficiary and therefore do not become part of their marital estate.

The lack of direct control over those assets effectively eliminates the risk of commingling. For parents who worry that their adult children may not remain married for the rest of their lives, the creation of a trust can be a way to leave them an inheritance without putting it at risk if their marriage ends.

Exploring a variety of estate planning tools, including well-funded trusts, can help people achieve their personal legacy goals. Testators with difficult family circumstances may benefit from creating comprehensive estate plans that address their concerns.