Ending your marriage through divorce can impact many other parts of your life, including your finances and your relationship with your children. Your estate plan exists at that the awkward intersection of your financial future, your personal relationships and your legal obligations to others.
Married couples often create joint estate plants or last wills, which might mean you have to consider estate planning after you file for divorce anyway. Parents with minor children often need to adjust their last will to reflect their new marital status and the impact it will have on the succession of guardianship for their children in the event of their death. Leaving a legacy behind for your children is another important consideration after your divorce.
In cases where you want to leave specific assets for your children and worry that your ex could squander what you leave behind, creating a trust as part of your post-divorce estate planning strategy is a good way to safeguard those potentially vulnerable assets.
A trust restricts your ex’s access to your assets
Ideally, you aren’t going to die for some time, meaning you will live to see your children make it into adulthood, which is when they will have the legal authority to accept an inheritance. However, the risk is always there for you to die while your children are still minors. If you don’t protect the assets you want to leave behind for them, your ex will likely assume control over those assets as the sole parent and guardian of the children.
That could mean that your savings and prized possessions will end up belonging to your ex or even sold or given away to others instead of winding up with your children. Creating a trust will make it substantially more difficult for your ex to access and misuse the assets that you want to leave for your children.
For example, the terms of the trust could prevent anyone from accessing the funds or assets until the children reach adulthood. You could also name a trustee who will scrutinize every attempted withdrawal and ensure that funds only get used for the expenses your children incur that your ex truly cannot manage on their own.
Pick someone to advocate for your children as trustee
Naming a trustee for an estate trust intended for your children is an important decision. The wrong person could violate their fiduciary duty to your children for personal financial gain. Placing someone you trust and that you know will comply with your rules for the dispersal of trust assets is of utmost importance.
Picking someone with a close bond to the children benefiting from the trust is a good way to reduce the potential for abuse or susceptibility to bribes or trickery by your ex.
Careful estate planning, including the creation of a trust, can help you create a legacy that will protect your children if anything happens to you before they become adults.