If anything happens to you before your children are grown, you naturally want them to have access to your money and assets so that they can have a secure, stable future. If your children are already adults, you may hope that your assets make life a little easier for them and provide a lasting legacy.
Unfortunately, the future is very uncertain — and all it takes to disrupt your plans and deprive your children of their full inheritance is a divorce (yours or theirs). Divorces and inheritances are a poor mix, so you may want to reconsider leaving a direct (or “outright”) inheritance to your children. Consider the following situations.
You’re getting divorced, and your children are minors
If anything happens to you before your children are grown, you naturally want to secure a stable future for them. That doesn’t mean you should leave them all of your insurance money and other assets outright.
As minors, anything left directly to your children will be controlled by their other parent. Do you really want your ex-spouse to have that authority? That could easily lead to financial abuses that leave your children without anything to rely upon once they do reach adulthood.
Your children are adults, and they get divorced
You may have read that inheritances are typically kept out of the “marital pot” and don’t have to be divided in a divorce. That’s only true if the money doesn’t end up commingled with their spouse’s funds. Few couples keep their money and assets strictly separate.
What can you do to prevent a divorce from draining the family’s wealth in the future? Consider leaving an inheritance in a trust to your children instead. Trusts are no longer the domain of the ultra-wealthy. They’re commonly used today to protect inheritances from ex-spouses, creditors and other potential drains.
With experienced legal guidance, you can determine what estate options are best for your family.