The creation of a comprehensive estate plan is in effect a gift that an individual gives to his or her loved ones. By carefully structuring the means by which assets will be distributed after one’s death, a great deal of stress and turmoil can be reduced for those left behind. However, there are certain areas of estate planning that offer a challenge to New Jersey residents. Addressing the risk of divorce is a prime example.
Many individuals wish to leave assets to a family member within a trust. It is understood that the spouse of said family member will also benefit from the gift. However, should a loved one eventually divorce, a portion of that gift could be lost within the property division process of the divorce. This is unacceptable to many in New Jersey, but in order to prevent such an outcome, careful planning steps must be taken.
It is possible to draft a trust in such a way as to state that a spouse becomes automatically removed from a trust at the time that any divorce action is filed. This helps ensure that the loved one will not lose a portion of his or her inheritance in the event of a divorce. However, it is also important to note that many couples file for divorce but then decide to remain together. Therefore, trusts that state that a divorce will eliminate a spouse from receiving an inheritance should also contain provisions that reinstate that individual if the divorce does not take place.
Wanting to preserve a loved one’s inheritance is the central focus of many New Jersey residents. Protecting against the risk of divorce can play a large role in that process. For those who wish to learn more about how to protect inherited assets against the property division portion of a divorce, it may be helpful to schedule a consultation with an estate planning attorney to go over the various available options.
Source: wealthmanagement.com, “Planning for Divorce When Drafting a Trust“, Kim Kamin, Feb. 27, 2015