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Specialty tag(s): Complex Property, Divorce for Business Owners, High Net Worth Divorce, Divorce, Pre-Divorce Guidance

How Can I Protect My Children’s Inheritance in a Divorce?

Thomas A. Greenwald | April 23, 2024

Divorce is as much a financial separation as it is a legal one. The division of assets can be challenging, and that challenge is compounded when you need to account for the future financial needs of children. The current needs of your children can be addressed, in part, through a child custody agreement and child support, but we understand that as a parent, you’re also looking ahead to their future financial wellness and security. What about the money you’d hoped to leave them someday in your will? And what about their college fund and the assets you hoped to pass down to them? Will all of that be divided and lost in the divorce? The key is pre-divorce strategic planning. There are options for you to consider to secure your children’s financial future and to protect their inheritance in a divorce.

What Measures Can I Take to Ensure That My Child’s Inheritance Remains Intact and Protected From the Divorce Settlement?

If you were hoping to leave your child a significant sum of money as an inheritance, one option is to protect that money now by setting up a trust. Set up a trust now, naming your child(ren) as the beneficiary, then appoint a trustee to manage the trust for your child until they’re old enough to do it. You can even set specific conditions for disbursements to your child: For instance, you might only allow withdrawals to pay for their education until they’re 25, or you might set it up to make annual payments to your child from age 18 onward.

An added benefit of setting up a properly established trust for your child to inherit is that it sets the money apart as their separate property. Under Texas law, that means that, as separate property, if your child gets divorced later on in their life, the money in the trust won’t be split with their spouse at the time of divorce.

What if I Want My Child to Inherit the Family Business?

If you inherited a family business or you started a business before your marriage, as long as you’ve kept sole ownership of it and your spouse hasn’t made contributions to it, it may be your separate property. That means that you should be able to retain full ownership of the business in your divorce and leave it to your child. It will then become their separate property.

However, if you started the business after you got married, it is presumed to be community property, and things can get a bit trickier. You’ll need to work out an agreement with your spouse that allows you to emerge with full ownership of the business. The expertise of a complex property division lawyer who can help you to negotiate a strategic solution can be extremely beneficial in these situations.

Achieving financial security and protecting assets for your children after a lifetime of your hard work can be a complex undertaking. To help you make the best possible decisions before and during your divorce, it’s important to work with skilled divorce attorneys who understand your values and will work with you to make the best decisions regarding your business and your family’s financial future. Goranson Bain Ausley Family law attorneys have the expertise and experience needed to provide the best possible guidance to each unique client as they navigate the nuances of divorce. Contact Goranson Bain Ausley today for a consultation. Our family law offices are conveniently located in Dallas, Fort Worth, Austin, Plano, Granbury and Midland.

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