Protecting Your Child’s Inheritance in a Divorce
A divorce involving children can be difficult on its own, even without thinking about financial matters. In some cases, you may have family heirlooms or property you want to save for your child. Or, if your child is the result of another relationship, you may worry that anything you set aside for them will be considered marital property. However, there are ways to ensure your child’s right to inheritance is not violated in a divorce.
Inheritance and Divorce
Generally, an inheritance that is outlined in wills or trusts is not subject to divorce proceedings. Inheritance is generally considered non-marital assets, especially if they were outlined prior to your marriage. Unless your ex-spouse’s funds were intermingled with the will or trust, your child’s inheritance should not be affected by the divorce.
But what if you do not have a will or trust set up? By default, all California children have inheritance rights, even if their parent did not have a will. However, if you pass away without a will, then all of your assets will go through probate court and it will determine what property your child will inherit. To avoid this situation, your best option is to outline what you would like your child to inherit in a will.
Similarly, setting up a trust can also protect your child’s future in divorce proceedings. The assets you set aside in a trust would be considered the legal property of the trust and the listed beneficiaries. As a result, these assets would be considered non-marital and be shielded from any distribution.
Securing a Grandchild’s Inheritance
In some cases, you may not be worried about your own divorce, but a divorce between your child and their spouse. If they were to get divorced, would the ex-spouse be able to claim your child’s inheritance in a divorce?
Not necessarily. If you set up a trust for your child and placed them as the sole recipient, then the property provided in the trust would be their property. The only situation where an ex-spouse may claim that property is if it is deposited into a joint bank account or was mixed into marital assets in some other way, such as by using it to pay for a house they shared. To avoid this, you can have the trust deposit the funds into your child’s personal account and structure the trust to state that they are the sole beneficiary.
Alternatively, you may have the trust purchase property directly for your child. This way, the funds provided by the trust never intermingled with marital assets and the related property would go directly to your child.
If you would like added protection, you may also claim your grandchild as a beneficiary. That way, the funds provided by the trust would be legally your grandchild’s and not a part of the marital assets. Depending on how the trust is worded, these assets may be designed to be passed onto each generation of the family and your grandchild’s right to inheritance would take priority over a divorce.
Whether you are looking to protect your grandmother’s engagement ring or personal savings you set aside for your child’s college tuition, several options exist to help ensure your child’s right to inheritance. Your best option is to discuss your case with a San Diego divorce attorney at Huguenor Mattis, A.P.C., especially if you are going through a high-asset divorce. Our law firm can help you review your assets and explain your child’s rights to inheritance. Call us at (858) 458-9500 to learn what options are available to you and your child.