As a parent, one of your primary responsibilities is to ensure your children are set up for a promising future. Many couples accomplish this by organizing their estate to provide their offspring with a guaranteed inheritance. However, if you and your partner choose to go your separate ways, your estate plan may no longer apply.
If you believe a divorce or legal separation is in your future, your children’s inheritance may be at risk. With careful preparation, however, you can protect the assets you want to go to your child and give them the best possible chance of inheriting those items in the future. Below, you’ll learn why a divorce or separation impacts your estate plans and what you can do about it.
Estate Planning and the Division of Assets
When married couples write estate plans, the documents they produce rarely consider the possibility that their relationship may end. Most estate planning documents, such as wills and testaments, include a clause regarding the death of one spouse, but not divorce or legal separation. As such, when spouses end their relationship, their plans may need to be significantly altered.
This is caused by Florida’s laws regarding the division of marital assets. According to the state’s equitable distribution statute, couples must divide their marital property fairly when separating or divorcing. Depending on how the property is split, items in your original will may no longer be yours. In that case, you must rely on your ex-spouse agreeing to maintain your original estate plans if you want your children to receive an asset you lost in your divorce.
This is not a reliable strategy. If your ex-spouse remarries, has additional children, or simply changes their mind, they may choose not to pass on the assets you wanted to go to your child. Furthermore, suppose your will and other estate documents are clearly out of date. In that case, there is a greater risk that they will be contested in probate court, reducing the overall value and putting your last wishes for your property in jeopardy.
Four Strategies to Safeguard Your Estate Plans
You may use specific legal strategies to remove assets from consideration in the asset division process, making it more likely for your child to receive them. These four techniques can help protect your estate and reduce the risk of significant interference during the probate process.
1. Write a Prenuptial or Postnuptial Agreement
The simplest solution to protect your child’s inheritance is to ensure it’s never eligible for asset division. One way to accomplish this is by using a premarital or postmarital agreement.
You have the right to distribute separate property however you want in your will. Separate property is yours alone, so it is not considered in asset division, and your spouse may not dictate how it is used. Writing a postnuptial agreement in your current marriage or a prenuptial agreement before getting remarried allows you to name heirlooms or other vital assets as separate property. That prevents the risk of division entirely.
2. Create a Trust or LLC
Another option to remove property from the division of assets is to work with your spouse to set up a trust. This is an excellent solution if you are sure you will not need to update your estate plans in the future.
When you create a trust, you set up an entity independent from your marriage. Any assets you put into it are officially owned by the trust, and you no longer own them. You and your spouse must agree on what marital assets you put in the trust and how it should be administered. However, once the trust is finalized, the assets are officially independent of your marital property and may not be divided in your divorce or separation.
Similarly, if the asset you want to protect is a family business, you can place it in a limited liability company (LLC). There are multiple ways to structure LLC ownership, all of which can protect the company from being sold or divided if your marriage ends. Working with an experienced estate planning attorney can help determine the best way to pass on a family company.
3. Transfer Property Early
If your children are adults, you may be able to bypass asset division concerns by passing on certain items directly. This is often an excellent solution for assets such as heirlooms, art, collectibles, vehicles, and real estate.
You can pass on the property through a trust by immediately naming your child the beneficiary. Alternatively, you can pass on the items as gifts. Federal law currently permits you to gift up to $15,000 per year, per person, without tax consequences, so you can personally ensure your children receive the items that matter to you most. This may also simplify your overall estate planning by reducing the assets that must be considered in your will.
4. Create a New Estate Plan as Soon as Possible
You should also protect your children’s inheritance after your split by creating a new estate plan immediately. If your ex-partner is still named as the primary beneficiary in your will, they will receive your assets after you pass, regardless of your marital status.
Writing new estate plans prevents this from happening. You can create a new will that removes all mention of your former partner and names your children as your heirs. This will ensure they actually receive everything you worked so hard to protect during your split.
Guard Your Children’s Inheritance During Your Split
Your children’s well-being is your top priority. Safeguard their future by protecting their inheritance during your divorce.
If you want to ensure your children’s inheritance stays safe, get in touch with the expert divorce attorneys at the Hache Law Firm, P. A. Our expertise includes marital dissolution, estate planning, and prenuptial and postnuptial agreements. We will use our experience in these fields to guide you through the process of guarding your children’s best interests and achieving the best possible outcome from your divorce. Get in touch today to learn more about how we can help you with your estate planning and divorce concerns.