Estate Planning for Divorced Parents with Minor Children

Whenever minor children are involved in an estate plan, you must be careful to ensure that you include all of the necessary terms and conditions in your will to guarantee your wishes regarding the care and upkeep of your minor children are met. When parents are divorced, estate planning for minor children becomes even more of an important issue. Estate planning for divorced parents can be complicated; therefore, you want to take immediate steps to ensure that your ex-spouse does not have any control over your estate or your child’s inheritance.

In a divorce situation, it is vital that you act quickly to update your estate plan. Estate planning for divorced parents should include the following steps:

  • Discuss your estate plans with your divorce attorney – Even though your divorce attorney may not be involved in changing your estate plan, he or she should ensure that the divorce settlement and final divorce decree includes clear language prohibiting your ex-spouse from having any right to assert a claim against your estate. The final order should include a waiver of the rights to share in each other’s estate and future assets.
  • Make a plan – Even before the divorce is final, begin making arrangements to update your estate plan, including revising your will, power of attorney, trust agreement, living will, beneficiary designations, and healthcare power of attorney.
  • Follow through – Do not let your plans simply be something you “need to do” at some point. Make the changes to your estate documents immediately to protect your assets and your child’s inheritance.

Guardianship and Financial Conservatorship

Who will care for my children if I die?

This is one of the most important issues to be considered during estate planning for divorced parents.

In most cases, when one parent dies the other parent assumes sole custody of the minor children. Unless your ex-spouse has been judged unfit to have custody, naming a guardian for your children will not result in your ex-spouse losing custody.

Estate planning for divorced parents should include a discussion between you and your ex-spouse concerning potential guardians for your children should both of you die while your children are minors.

The guardian should be named in both of your wills so that it is clear to the court who you want to be responsible for caring for your minor children should both you and your ex-spouse die. Regardless of whether you and your ex-spouse agree on a guardian, you should always name a guardian for your minor children in your will.

Who will control my children’s inheritance?

This is potentially a volatile issue in the process of estate planning for divorced parents. The matter of who controls your children’s inheritance is a separate issue from who is the caretaker for your children. Even though your ex-spouse will assume sole custody of your children upon your death, you have the right to name a financial conservator to control your children’s inheritance.

If you do not name a person other than your husband to manage and control your children’s inheritance, your ex-spouse will have control over the assets. He or she will be able to invest, manage, and use the inheritance for the care of your children if you do not take the proper steps to prevent this from happening.

You have several options for naming a person to manage and control your children’s inheritance. You can create a simple trust within your will naming a person other than your ex-spouse as the trustee to manage your children’s inheritance until your children reach a certain age.

You can also set up a Revocable Living Trust to hold your children’s inheritance and limit how the funds may be used. For example, you can direct the trustee to use the funds for your child’s education or for other specific purposes. You may also direct that any funds used for your children be paid directly to the school or institution that is providing the service rather than paying the funds to your ex-spouse.

Designating The Right Beneficiary

Beneficiary designations can be tricky in a divorce situation. You do not want your ex-spouse to have control over the asset; however, naming your minor child as a beneficiary is not practical. The court will name a guardian, usually your ex-spouse, to manage the asset until your child reaches the age of 18. It is probably not your desire for your ex-spouse to be in control of an asset nor do you want your child to receive a large sum of money at the age of 18. Therefore, you must choose a beneficiary you can trust to manage the asset.

You can choose to name a parent or other person as beneficiary but there is no guarantee that person will use the funds for your children. The funds could also be at risk if the beneficiary is in financial trouble and creditors seek to seize his or her assets. Naming a trust as the beneficiary is a much better way to protect these funds for your children. The funds are paid to the trust and they are managed under the same terms as your children’s other inherited assets.

Careful Planning For Minor Children

With careful estate planning, you can protect your children’s inheritance and prevent your ex-spouse from having any control over your estate or your children’s inheritance. If you have concerns about estate planning for divorced parents, consult with an experienced probate attorney.