Of the many questions you’ll have to think about and answer as you go through the estate planning process, one of the more surprising you may have to consider is the question of what happens should your children get divorced. In some situations a child’s divorce can complicate your estate planning decisions, so you will need to be ready to create a plan that takes this possibility into account.
When people get divorced they have to divide their property between them as part of any divorce settlement. In most states an inheritance is considered separate property, meaning that should you pass an inheritance to your child that child will be able to retain that property as part of the divorce settlement.
However, should the property you give to your child as part of an inheritance appreciate in value after the child receives the gift but before getting divorced, that appreciation can be considered marital property. This means the courts will have to divide the property between the parties and not simply give it to your child.
No matter what the law of your state is you will want to consider the best way to transfer property to your child so that it is protected from any potential divorce complications. Creating a trust, for example, that uses an independent trustee and gives your child trust funds in accordance with strict terms may be one option you should consider, though others may be appropriate depending on your particular needs and circumstances.