For most parents, leaving your children inheritances through your estate plan is a natural choice. However, if you have children who are married, or who may become married, you will need to consider the possibility that those children may get divorced. When this happens, what happens to an inheritance you leave your child?
The answer depends largely on the state in which you live. Usually, inheritances that a child receives from a parent are considered separate property under the law. However, if the child commingles inherited assets with marital assets, which is a common occurence, the child’s divorcing spouse may wind up with a portion of that inheritance. Also, if the property you left the child increased in value after he or she received it, that increase in value may be considered during the divorce process and part of it may go to your child’s spouse.
To prevent any inheritance from getting diluted by a child’s subsequent divorce, you can create a trust that allows your child the access to and enjoyment of his or her inheritance, and that ensures the child’s inheritance is not lost in case of a divorce.
Such protections are not automatic and careful drafting is required to acheive the desired degree of protection. In any case, you’ll need to speak to an expert estate planning attorney to discuss the possible strategies you can use in protecting inheritances from a child’s subsequent divorce.