How to Go About Estate Planning in the Event of a Child's Divorce

Many New York residents may be confused about the estate planning process. What can make it even more complicated is determining what to do so that in the event that people's children divorces, the ex-spouse does not take all of their hard-earned money. Here are some things people should know estate planning in this situation.

Depending on state law, the judge divides marital property during a divorce. Marital property includes anything that either spouse acquired during the marriage. However, this does not include inheritances, which are considered separate property. This means that property left to one spouse remains the property of that spouse and the ex-spouse is not allowed to claim it.

However, it's not as simple as that. It becomes complicated estate planning in terms of any appreciation of the inheritance's value. This is considered marital property and must be divided during a divorce.

Therefore, parents may want to leave money in a trust instead of an inheritance. In a trust, the child can receive the money over a period of time instead of a lump sum at the time of the parent's death. This will result in less value appreciation, which means less money for the former spouse.

Managing marital and non-marital property can be complicated. Items that a person owned before marriage can become marital property if the spouse helped or contributed to an item in some way, such as a home or a business, the item could be subject to division during a divorce. Parents looking to prevent the transfer of money to a child' spouse should investigate various strategies.

Source: The Gazette, " Money & the Law: Child's divorce can complicate estate planning," Jim Flynn, Nov. 25, 2012

Related Posts
  • How to Choose the Right Executor for Your Estate: Tips and Considerations Read More
  • Estate & Probate for Digital Assets Read More
  • The Importance of Updating Your Estate Plan Regularly Read More