If you want to make sure that the inheritance you leave to your child will not be diminished by a divorce, you can take steps now to protect it. You don’t need to wait until the marriage is in trouble. You don’t even need to wait until your child is married. You can protect your child’s inheritance by providing, in your will, that it will be paid into a trust that is solely in your child’s name.
Inheritance is Not Marital Property, Unless…
In general, assets that are inherited remain separate property, not marital property. But there are a couple of things you should know about that.
First, and you’ve probably guessed this part, that only applies if you leave the money or property to your child rather than to your child and his spouse. Don’t fall into the trap of thinking it should be obvious that you didn’t mean for the spouse to get a share if the marriage goes sour. If you leave it to them as a couple, it goes to both of them and that is not revoked by divorce.
Second, comingling makes it marital property. If your kid puts the inheritance in a joint account with his spouse, it becomes marital property. If they use it to buy a house in both of their names, again it’s subject to asset division in a divorce. So, why not just make your child promise not to do that? Because it’s unrealistic. You don’t know what is going to happen in the years to come. If your child has to make the choice between doing what’s best for his family and honoring a promise to you long after you’re dead, it is most likely he will do what’s best for his family. And if they don’t, that decision could very well lead to divorce.
By providing, in your will, that your child’s inheritance will be paid into a trust that is solely in the name of your child, you can protect it from being lost in a divorce. The trust can also be created in a way that will also protect the assets from a spouse who is bad with money. You’ll need to consult with an attorney who is experienced in handling wills and trusts to make sure that your assets will truly be distributed as you wish, and so that you will understand the implications of your choice.
You will be limiting how you child uses his inheritance, which may not be something you want to do. If you do it, you should discuss it with him in advance so that he understands the limitations.