Other than the custody of your children, the division of your possessions is probably the most contentious part of a divorce. People often go to great lengths to keep their ex from unfairly walking away from the marriage with more of the marital assets than they deserve. Those same people can then make the mistake of not planning to protect those assets from their ex if they die.
You might think that leaving everything to your children after the divorce is the simplest solution, but the way that you do so could leave those assets vulnerable to use by your ex. If you die while your children are still minors, your ex will very likely assume control over any direct inheritance they receive until they turn 18.
Sheltering that inheritance in a trust is the best way to protect it for your children in the future. A trust prohibits someone from squandering the funds by structuring when and why they can access the trust assets.
Creating a trust for your children gives you control over your legacy
Creating a trust as part of an estate plan is a good idea for higher-income individuals, even if their children are already at or near the age of 18. A trust can reduce tax obligations associated with the inheritance and prevent the people you leave assets for from squandering those assets wastefully.
Depending on the overall value of your assets, the way you hold them, the number of heirs you have and other factors, there are many ways you can structure a trust and the dispersal of its assets. Limiting someone’s access to only after they graduate college or reach other life goals is one option.
Requiring evidence for any withdrawal to ensure it goes toward expenses related to education, maintaining a home or managing a business is another option. The use of a trust in your estate plan will benefit you and your heirs by safeguarding your intended legacy and the assets you wish for them to inherit.
Name a trustee who can hold their own against your ex
Creating a trust will do little to protect those assets from your ex if you name them as the trustee. Instead, you want to look at other people who care about your children and have the competence to manage complex financial assets.
Close family members and long-trusted co-workers may be willing to fill the role of trustee, particularly if you incentivize them by allocating financial compensation for those services. A good trustee can protect the trust and increase its value in time instead of letting your ex diminish the value of those assets before your children ever have access to them.