Attorney Ora Schwartzberg, Plymouth, NH
A major concern of many of our clients is how to protect their children’s inheritance from a future divorce. If planned in advance, such protection can be incorporated into your Revocable Living Trust.
One of the ways to offer such protection is to leave your children’s inheritances to them in Trust rather than leaving it to them outright. Each child’s Trust would provide for the appointment of an Independent Distribution Trustee who is not related to or subordinate to (i.e., under the control of ) your child.
It is important that this Independent Trustee have complete discretion as to whether to distribute money or other property to your child. The Trust for each of your children would have language stating that the Trustee could withhold distributions to your child, if it is in the best interest of your child to do so.
The protection arises out of the fact that if your child can’t force the Independent Trustee to distribute property to them, neither can their divorcing spouse.
Such a Trust could also provide that the Trustee have the discretion to accelerate the distribution of property to your child, if it is in the best interest of your child to do so, even if it results in the exhaustion of all property in the Trust. This would allow your child to have use of their inheritance as if you had left it to them outright.