As a parent, you’ve likely spent years building up your savings and assets, hoping to leave a legacy for your children. However, one concern many parents have that has been expressed to Beck, Lenox & Stolzer is ensuring that the inheritance they pass on stays with their child and doesn’t end up benefiting a spouse. Whether out of love for your children or worrying about future divorces, it’s natural to consider inheritance planning strategies to safeguard your hard-earned assets. How do I protect my child’s inheritance?
Can a Trust Keep an Inheritance Separate?
A trust is one of the most common and effective ways to ensure that your child is the sole benefactor of their inheritance. By setting up a trust, you control how and when your assets are distributed. A trust can be created now while you’re still alive or can take effect upon your passing.
You can name the trust as the beneficiary of your retirement accounts, life insurance, or other assets. The trustee, a person you designate, will follow your instructions regarding when and how the money or property is given to your child.
At Beck, Lenox & Stolzer, our attorneys offer what is called a Heritage Trust. It protects your child’s inheritance from bankruptcy, bill collectors and divorce courts. There has been a significant increase in requests for this type of trust.
Should My Child Get a Prenuptial Agreement?
While prenuptial agreements used to carry a certain stigma, that is no longer the case. These agreements have become more common, especially among younger generations. A prenuptial agreement is signed before marriage and details how a couple’s financial matters will be handled in case of a divorce.
If your child is open to the idea, they can use a prenuptial agreement to protect their future inheritance. This legal document can specify which assets belong to your child, preventing a spouse from making any claims.
What if My Child Is Already Married?
If your child is already married, safeguarding their inheritance is still an option. A postnuptial agreement works similarly to a prenuptial agreement but is signed after the wedding. This document can outline which assets, including future inheritances, will remain separate in the event of a divorce.
Discussing a postnuptial agreement might feel tricky, as it requires open communication between your child and their spouse. However, it can be essential for ensuring that your child’s financial future remains protected.
How Do Estate Planning Professionals Help with Inheritance Planning?
While legal strategies like trusts, prenuptial agreements and postnuptial agreements are essential to inheritance planning, financial tools also play a role. Working with a trusted estate planning professional who provides the legal competence and the knowledge to examine your complete financial background can help you evaluate the best way to structure your assets and accounts to minimize potential risks. They can guide you on which accounts to designate for inheritance and which might be more vulnerable to claims in a divorce.
Take Action to Protect Your Child’s Inheritance
If you’re ready to begin inheritance planning or want to explore how to protect your child’s financial future, we can help. Request a consultation with our estate planning team today to discuss your specific situation and start building a plan that gives you peace of mind. Click here to get started.
Key Takeaways:
- Protect Your Child’s Inheritance: Trusts, prenuptial agreements and postnuptial agreements can help prevent an inheritance from being shared with a spouse.
- Maintain Control: A trust allows you to control how and when your child receives their inheritance, adding extra layers of protection.
- Flexible Solutions: Options like prenuptial and postnuptial agreements offer flexibility, even if your child is already married.
- Consult a Professional: Legal and financial guidance ensures that your inheritance planning is structured effectively, giving you peace of mind.
Reference: Northwestern Mutual (Apr. 22, 2022) “Can I Leave Money to My Kids But Not Their Spouses?”
