What Happens to My Child’s Inheritance if They Divorce?

Note: The following article is part of our Complimentary Articles Series, designed to provide additional insights and detailed information on specific topics within estate planning.

Alongside this article, we suggest exploring our pillar articles for a comprehensive understanding of general estate planning topics.

• How Can I Ensure My Assets Go to My Children When My Spouse Remarries?
• Can I Prevent Future Taxes on My Children's Inheritance?
• Can I Gift My Home to My Children to Avoid Inheritance Tax?
• What Are the Implications of Transferring Property to My Children?

INTRODUCTION

When planning your Estate, you want to ensure that your assets are distributed to your loved ones as smoothly as possible, especially your children.

But like many things in life, things happen unexpectedly sometimes, and life-shattering events like divorce can make you question to what extent your child's inheritance will be protected.

This article highlights what might happen to your child's inheritance if they divorce and provides advice on safeguarding your assets for future generations.

For context, you may wish to refer to our related articles on estate planning.

HOW TO PROTECT YOUR CHILD'S INHERITANCE

• Pre-Marital Agreements: A pre-marital agreement (prenuptial agreement) is one way to protect your child's inheritance, whereby your child and their partner can decide before marrying how certain assets (including inheritances) will be divided in the event of a divorce. This binding contract can offer clarity and safeguard your family's assets.

• Inheritance Received During Marriage: It's also important to consider how to handle assets your child inherits during their marriage. Depending on the situation, inherited assets may have different legal statuses. These assets might be treated as separate property, thereby protecting them from potential division, or they might become a part of the marital Estate and be divided as part of the divorce settlement.

• Trusts: Establishing a Trust as part of your estate plan can help safeguard your child's inheritance. The advantage of a Trust is that you can specify the circumstances in which the inheritance is disbursed. If, for example, you want to guarantee that the assets are used for specific purposes to your child's benefit (e.g., education, healthcare), your Trust would only permit distributions for those particular purposes when the time (or trigger event) arrive.

• Carry Our Frequent Reviews and Updates: At Squiggle, we can't emphasise enough the importance of regular reviews to ensure that your estate planning documents accurately reflect your evolving circumstances. We believe estate planning should be a dynamic process that adapts as your life circumstances evolve and protects your assets and loved ones when life throws us curveballs like divorce.

Need to know more?

If you are worried about how a divorce might affect your child's inheritance, feel free to contact us for an initial free no-obligation call, where we'll bring you through some options to secure peace of mind for you and your loved ones.

Book a callback and we'd be happy to arrange a no-cost, no-obligation discussion with you to lay out the options available.

Alternatively, call us on 01233 659 796.

Or reach out to us here.