If you have worked hard to build up your savings and your wealth, and know that these savings give you security and provide a safety net for your children when you pass away, one potential threat for your hard work is seeing this wealth lost to a child’s spouse in the event that those two get divorced.
There are several different tools that can be used to minimize your exposure to such a risk. These are known as IRA trust, trustee selection, dynasty trust and prenuptial agreements. It is not a good idea to name your child as the beneficiary of your IRA or your 401(k). The child may be free to select the next recipient who is likely the spouse rather than your grandchildren. A dynasty trust may allow you to use a protective trust that is incorporated into a revocable living trust or a will to build a protective wall around the child’s inheritance.
Choosing the right trustee who will serve in a neutral manner can also be a valuable wall of protection between your estate and your child’s former spouse. Finally, although prenuptial agreements are often a difficult conversation to initiate, they are becoming more popular because people are waiting longer to marry. After they have decided to take that leap, they are more like to have amassed assets and careers. Furthermore, both spouses are more likely to have jobs and to be concerned about what happens in the event of a divorce.
Consider bringing up the value of a prenuptial agreement with your child today, and setting up a time to chat with your Pasadena estate planning attorney about protecting your interests.
