Protecting your assets for your children’s Inheritance
A primary concern for people who are entering a second marriage is protecting their assets for their children’s future inheritance.
First, you must assure that the assets you intend to leave to your children are not lost in a divorce, as only a prenuptial agreement can do. Second, you must assure that the assets you intend to leave to your children in your Last Will and Testament actually find their way to your children, as only a prenuptial agreement or postnuptial agreement can do. See: Death: Protect Your Will
Some people are under the impression that a trust can protect their assets. In fact, under certain circumstances a judge can order the assets of a trust to be transferred to a spouse. The court can also assign the accretions and income of a trust to a ex-spouse. When income of a trust is assigned to a spouse the assets of the trust must remain intact and unchanged for the benefit of the spouse. This freezes the trust for the sole benefit of the spouse.
Let’s consider what can happen if you have significant assets that were acquired before entering a second marriage and children from a previous marriage. Should you die, your surviving spouse is statutorily entitled to up to 50% of your estate, if you do not have a properly drafted prenuptial agreement, even though you have a Will. This means that when your surviving spouse dies, your assets, that your surviving spouse received at the time of your death, will be passed on to his or her children, leaving your children with nothing.
A properly drafted prenuptial or post-nuptial agreement is the only way to assure that your children’s inheritance is protected from a divorce and upon your death.