As a newly divorced mother, you probably have a lot on your mind. For example, you have to figure out how to provide everything your children need on just the income you currently have and the child support you receive. Many divorced parents only realize after the end of their marriage that child support typically does not cover even half of the monthly costs caring for a child incurs for your household.
One of the financial considerations you could overlook to the detriment of your children and your own peace of mind is the need to rearrange how you structure your estate plan. You may have shared the last will with your ex during your marriage, or you may not have even bothered to create an estate plan yet.
Regardless of which situation you find yourself in, you will need to take action sooner rather than later to ensure the assets you want your children to inherit are protected for their use only. The creation of a trust is usually the simplest way to do so.
If you die while your children are minors, your ex could access everything
It is common for single parents to want to leave most of their assets to their children when they die. However, your children may not be old enough to legally inherit those assets at the time of your death. In that situation, your ex will likely assume full custody of your children. That will mean that they will likely control any financial assets you leave to your children.
Your ex could spend every penny from your life insurance policy or sell the house that you wanted your children to inherit before they ever turn 18. If your ex does spend everything while they are minors, your children will have very few options to recover those lost assets.
Even if you want to name someone else as guardian for your children, unless the courts terminate your ex’s parental rights, their legal rights will trump your last wishes. Simply put, you need to plan to protect your legacy from your ex.
A trust can keep assets safe for your children
Creating a trust is helpful for many people trying to establish an estate plan. For parents, a trust can be particularly beneficial because it allows for more control over the disbursement and use of funds. You can prevent anyone from accessing the funds until your children turn 18. You can also place some limits on what your children use the funds for.
For example, you could limit their use of the inheritance to funding a home purchase or paying for college. The personalities of your children and their dreams for the future should inform the strategy you employ when creating a trust after a divorce. While it may involve a few extra steps, the peace of mind that comes from knowing your children will have adequate protection and access to the inheritance you want to leave them is worth the extra work.