Kids Getting a Divorce? Learn How It Affects Your Will

Consider this scenario: You have spent your life accumulating assets and providing for your children. You have drawn up a Will that ensures your children receive your assets in the manner that you wish. However, one of your offspring is going through a divorce; so, what steps do you need to take to prevent your children-in-law from making a claim against your child’s inheritance? 

This is a common concern among our clients and can seem a rather complicated and worrying situation. Thankfully the solution is relatively simple when you have a professionally drafted Will in place and an expert paralegal on hand!

It may be that upon your child’s marriage, you do not trust their new spouse’s intentions and wish for a clause to be written into your will at that point. We regularly have clients who are concerned their new in-laws are marrying for financial gain and so wish to protect their money in advance.

However, the most frequent scenario is that a divorce is sudden and unexpected, and therefore quick action is required to safeguard the inheritance.

Follow these tips to shield your finances and ensure your hard-earned assets go to your loved ones in the way you wish. 

Ring-Fence Your Assets

A Discretionary Trust is the most frequently used structure within a Will (or alongside one during life) to protect your assets. By transferring your assets into this sort of Trust, the assets are looked after by chosen trusted Executors or Trustees in order to protect the beneficiary’s inheritance. 

These Trustees have the autonomy to disperse inheritance to your children and grandchildren in line with your wishes. They are usually chosen for the Trust you place in them due to their neutrality or that they are professional Trustees. 

The Trustees are guided via a Letter of Wishes which would include how you want your assets to be dispersed and an outline of how you wish to guard your assets against any potential divorce, loss, or misadventure of your offspring.

However, it is important to note that the Letter of Wishes is not legally binding and is there to act as a guide. The Trustees may choose not to follow it, usually if circumstances change, making your wishes no longer relevant yet protecting the beneficiaries nonetheless. This is why it is so critical that you trust the discretion of your appointed Trustees. 

Another important consideration is that although Discretionary Trusts are most commonly created to protect against the consequence of divorce, they can also protect beneficiaries losing their inheritance as a result of bankruptcy, protecting them in the case of drug or alcohol dependence, and also generational Inheritance Tax (the inheritance doesn’t add to their estate if kept in trust).

Precautions to Note

As with all best intentions, there are downsides to consider. It is not possible to cut your spouse’s partner out of inheritance entirely. If your child dies while married, your assets will pass directly to the spouse. If the spouse gets remarried, then your assets are likely to fall outside of your family structure and could pass to their new partner’s children.

A well-made Discretionary Trust can help with this scenario as you could choose to leave all of your assets to your grandchildren rather than your children. However, your children may not be best pleased with this scenario, and if circumstances meant that your grandchildren inherited at a young age, it might not be beneficial for them. 

Choosing the right Trustees is a vitally important decision. Often Trustees are the Executors of your Will. You are putting a lot of pressure on the Trustees, so choosing the right people is vital. It is crucial that they are trustworthy, have a favourable skillset, understand the responsibility being placed on them, and fully comprehend the implications of taking on the role.

The Last Word

Setting up a Discretionary Trust has the best intentions of your children and grandchildren at its core. 

However, your children may not be overjoyed at you tying up their inheritance or the idea that you are casting doubt on their marriage. For this reason, we advise transparent communication with your children so that they understand your intentions and that you wish to provide for them in the best possible manner. 

There is only one certainty in this situation, and that is to seek professional help and legal advice. An experienced paralegal will set out the pros and cons for you with clarity. Their experience will also mean they can overcome any obstacles and hurdles in the process with efficiency and accuracy.

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