My husband and I are preparing a will. We plan to divide a sizable estate equally between our two daughters. We wondered if there is a way to assure that each daughter will retain all of her inheritance in the event of a divorce.
2 Answers from Attorneys
Your Will does not control the asset division of your daughters in a divorce. However, if your daughter live in New York State, then the inheritance would be protected. New York State is an Equitable Distribution state which means that the inheritance the daughters receive would remain their Separate Property and not be divided in a divorce.
If you wish to protect your children's inheritance from their spouses or future spouses, the best way to do so is by giving your children their inheritance in trust, not outright. There are many types of trust, so you should consult with a knowledgeable estate planning attorney who can help you decide what is best for you and your children. However, to give you something to think about, many wealthy clients set up dynasty trusts for their children (which means they keep it in trust forever). Others simply make most if it payable when the children are much older and through their first divorce or two.
The other thing to remember is that you many have significant assets in which you have named your children as beneficiary (life insurance, IRA and 401(k)). These would not be protected unless you set up special trusts to deal with those assets.
Finally, although an inheritance is not subject to equitable distribution if your child keeps the money in his or her own name, many people who inherit money co-mingle it, making it subject to equitable distribution. Morever, if it is not in a trust, it will be looked at for purposes of alimony and child support.
Hope that helps.
Kevin A. Pollock, J.D., LL.M.
P: (609) 818-1555
Licensed to practice law in Florida, New Jersey, New York and Pennsylvania.
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