Estate Planning Advice to Protect Your Children if They Get Divorced in Santa Clara

An unexpectedly common problem that Santa Clara estate planning lawyers encounter is how the proceeds of an estate are handled when the beneficiary gets divorced. We don’t want to think of our children dealing with the pain of a divorce, but losing the inheritance you left behind would certainly pour salt in the wound. That’s why more estate planning lawyers are working to help clients ensure that their children keep what should rightfully be theirs.

Each state has its own rules regarding what happens to inherited funds in the case of a divorce, so you want to be sure to do your planning with a knowledgeable Santa Clara estate planning lawyer. While the need to build in some safety mechanisms may be more obvious when you don’t like your son- or daughter-in-law, it’s important to remember that the future is uncertain and the only constant is change. Having a contingency plan in place just makes sense.

Why is this a big deal? Take the example of a fictitious Santa Clara couple. The wife inherits $100,000 from her parents. According to estate planning law in many states, the $100,000 will probably be protected in the case of an immediate divorce and will revert to the wife. On the other hand, over time the funds can become commingled with other marital property and lose their protected character.  In other states, similar problems can arise.

One of the ways that an estate planning lawyer in California will likely suggest avoiding this outcome would be to create a well-thought-out trust. In order to do this, the trust would be structured in a way that allows the child ongoing access to the funds but also limits his or her “ownership” of them, therefore keeping them from becoming marital property. There are different means an estate planning lawyer can use to reach this goal, such as naming the child as a trustee or co-trustee. Trustees generally have control of the funds but not out-and-out ownership.

Additionally, a good California estate planning lawyer may advise you to specify how the funds in the trust may be used, for example for educational purposes, although there are several reasonable ways to structure these requirements. One thing to avoid is a situation where the child receives regularly scheduled distributions, as that money could be considered marital property. Instead, the child should need to request funds from a trustee who is predisposed to provide them.

As with any area of Santa Clara estate planning law, the topic can be pretty complex, but knowing the right questions to ask of your lawyer can make a big difference in being on the right track.