There are several steps you can take when protecting your children’s inheritance from divorce, whether you are in the beginning stages of a separation or divorce proceedings or preparing to remarry or form a domestic partnership when one/both of you have children from previous relationships.
In any of the above or more complex situations, consulting with an experienced, dedicated estate planning attorney is the best way to ensure you’ve covered all your legal bases. As you can imagine, the parameters around finances, inheritances, and who is entitled to what varies from person-to-person, and family-to-family. Creating transparent, legally-sound agreements are the best way to know your wishes are honored – whatever the future may bring.
Most Common Concerns Around Divorce and your Children’s Inheritance
Here are some of the most common concerns individuals have around protecting children’s inheritances in the case of divorce:
- That their non-marital or non-biological children (foster children, step-children, children of long-time domestic partners, etc.) will not receive their intended inheritance
- Fear that an adult child’s partner or spouse will take over the inheritance
- Worry an existing inheritance from a relative will not pass directly to your children, but will be blended with assets that get divided during a divorce
Protecting a Child’s Inheritance During Divorce: The Basics
Here are some basic facts worth noting about how California law interprets inheritance, finances, and assets during and after divorce:
Consider drafting a prenuptial
If you have considerable assets prior to marriage that you want to protect for current or future children, a prenuptial agreement is a good first step. The same is true if you are planning to remarry, and both of you have adult children from a previous marriage or relationship.
It’s important to know upfront that the courts may view younger step-children, with you for the majority of their childhood years, equal to your biological children. Depending on the situation, step-children may have the same rights to your divided assets as your biological and/or legally adopted children if you don’t have a will in place, or unless you’ve specified otherwise.
While prenuptials are frequently contested in courts during a divorce, the legal system is likely to respect the inheritance wishes stated there, especially if you die without a clear will or trust in place.
Non-marital/non-biological children have inheritance rights
This fact is not widely known. However, the court does consider a non-marital/non-biological child’s interest and inheritance rights after you die, even if you die without a will or trust in place. However, it is painful and emotionally complex for that child(ren) if they have to advocate for themselves, especially if the rest of the family is opposed to their entitled share of your assets.
Therefore, it’s best to draw up legally-sound paperwork, with the assistance of a qualified estate lawyer, to ensure that all of your children obtain the inheritance you wish them to receive.
Keep your children’s inheritance assets separate to protect their rights
While the court views property, possessions, and financial inheritances as your sole property, protecting them from the community property pot, there are exceptions. While it’s easy to qualify that the heirloom china from your mother is solely yours, and not your ex-spouse’s, it gets harder to keep inheritance assets free of the typical 50/50 split if you added it to a joint checking or savings account.
If you receive a specific monetary amount and want to protect it from California’s community property laws, keep your copy of the legal will, trust, or probate documents that clearly state your inheritance, and deposit financial assets into your own savings account or trust account – not a joint account. This makes it easier for you to retain these assets, and state children as direct beneficiaries, during your divorce and the establishment of a new will/trust.
Create a trust solely in the name of the child in question when drafting your will/trust
If you want to ensure that your child, and only your child, has access to their share of your assets, create a trust that is solely in their name. This protects them from:
- Controlling or manipulative parent who may use the money for themselves if the child is a minor (you can designate a trustee of that account until children reach a certain age, further protection if you die before your children are adults or less capable of making sound financial decisions)
- A partner or spouse who may consider that money equally theirs, or pressure your child to share it or squander it
- Pressure from squabbling or unsupportive siblings who may not agree with your decision
If you have older, more mature or adult children, educate them about how inheritances and community property are treated. It may be wise to invite them with you to an appointment with your estate planning attorney so they feel more a part of the process, and so they have a foundation of clear, education and information when they need it down the road.
As with all things pertaining to secure, legally-sound wills and trusts, the more clear and exact your intentions, the more likely they are to uphold your desires for asset distribution to children and others upon your death.
let us Help you
Contact us here at Tseng Law Firm, or give us a call at (510) 835-3090, to learn more about how to protect your assets and secure your children’s inheritance as you seem fit. We draft legally-relevant, solid estate plans that hold up in court.