For most parents, a child’s wedding day is one of the happiest occasions in life, especially when they love and adore that child’s spouse. Sometimes, however, opinions change and parents become concerned about how to protect the assets they plan to leave their children if divorce enters the equation.
Fortunately, there are several estate planning devices that allow for assets to be shielded from those who may become the child’s ex-spouse:
Irrevocable trust – one of the most common ways to pass assets to children, an irrevocable trust provides asset protection so long as distributions not mixed with marital funds.
Domestic asset protection trust – this type of trust can be used to protect assets from a divorce by having your child place his or her assets into the trust and naming a beneficiary that is someone other than a spouse. It is important to look at the timing and circumstances surrounding the creation of a domestic asset protection trust, though, so as to not trigger fraudulent transfer rules. These trusts are best set up before the marriage, and less ideal when the marriage has already taken place but before problems arise, but are not effective when set up on the eve of divorce.
Post-marital agreement – many parents would like for their children to have a prenuptial agreement in place, but they are unsuccessful in convincing their child to negotiate one before the wedding. Many times the child finds it easier to accept the drafting of a post-nuptial agreement later on to protect family assets.
If you’d like to learn more about Trusts, Pre- and Post-Marital Agreements and other aspects of estate planning, call our office at (612) 206-3701 or fill out our contact form today to schedule a time for us to sit down and talk.
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