Many parents work hard to ensure that the needs of their children are met. Over the years, they could ultimately amass a significant amount of wealth — assets that they want to pass on to their children upon their death. However, some parents in Georgia may be concerned about their child’s spouse receiving part of an inheritance in a divorce. Fortunately, there are trusts and other options that can provide protection.
One option is to avoid listing an asset in the child’s name in an estate plan in order to protect it during the process of dividing assets during a divorce. Instead, creating a dynasty trust can protect the asset. A dynasty trust is typically incorporated into a revocable living trust or will and essentially creates a barrier around the inheritance, protecting it from both divorce and creditors while ensuring that it remains in the family.
Some estate planning professionals also advise against listing a child as the beneficiary of an IRA or 401(k). If listed, the child can then choose the next recipient, potentially allowing his or her spouse to benefit from the asset rather than another family member of the original owner. Fortunately, an IRA trust can protect these retirement plans, allowing a person to provide instructions on what happens to the remaining balance upon the child’s death and also protecting it from creditors and divorce.
Creating an estate plan, especially one that includes trusts, can be a complicated process for those in Georgia who have little experience with the process. Fortunately, there are experienced professionals who fully understand all of the available options. With the help of an estate planning attorney, a person is able to have confidence in their plan, knowing that he or she has as many protections in place as possible for both their legacy and their children’s financial future.
Source: investopedia.com, “Protecting Your Estate from a Child’s ex-Spouse“, Peter Klenk, Nov. 9, 2017