Married couples tend to rely on one another in their estate plans. For example, you may not worry so much about naming a guardian if you believe that your spouse will just take over caring for your children if something happens to you. Leaving your children a lump-sum inheritance will seem like such an unlikely thing to happen that you won’t feel compelled to make alternate plans despite the risk.
Once you divorce, circumstances in your family and for your estate change significantly. Although it is still likely that your ex can provide for your children if anything happens to you, they could have control over the inheritance for your children unless you plan carefully.
A trust limits outside control over inherited assets
If you die, much of your property will likely pass directly to your children. If they are not yet 18 when you die, then control over that property goes to the person with legal authority over the children. For most divorced parents, that will be their ex-spouse.
Until your children turn 18, your ex will have authority over and access to anything that the children directly inherit. The assets you wanted your children to receive could be completely gone by the time they become adults because your ex used it all for selfish purposes.
Putting your children’s inheritance in a trust will mean that your ex can’t access it unless they convince the trustee that the situation meets certain criteria first. Naming someone else as the trustee will minimize the potential of your ex abusing or wasting the assets you want your children to inherit.
The trust also helps if you ever remarry
Estate planning when you have a new spouse and children that you do not share will also require careful consideration. The steps you take to protect your children now could also make estate planning easier if you remarry in the future.
The benefits of a trust aren’t just limited to preventing access by someone with malicious intent or bad money management. A trust also prevents creditors from coming after those assets and can structure when and how your children access their inheritance. A trust can protect them from estate taxes and give them emergency resources when they finally strike out as independent adults.
Thinking about your family’s changing needs can help you create the best estate plan for your family’s needs and documents, like trusts, that will make your legacy plans a reality.