Who Controls Your Child's Inheritance After Divorce?
Who Controls Your Child's Inheritance After Divorce?
Quick Answer
If you are divorced or separated in Arizona, your child's other parent does not necessarily have to control the inheritance you leave for your child. Your estate plan can provide that your child's inheritance is held in a Trust and name a Trustee to manage that money according to the instructions in your Trust. The person managing the inheritance and the person raising your child do not have to be the same person.
Key Takeaways
- A guardian and a Trustee have different responsibilities.
- Your child's other parent may raise your child without necessarily managing the inheritance you leave behind.
- A Trust can hold an inheritance for the benefit of a minor child.
- You can choose the Trustee who manages assets held in the Trust.
- Your Trust can establish how the money may be used and when your child receives control of the inheritance.
- Estate planning after divorce can help Arizona parents separate decisions about who cares for their children from decisions about who manages their children's inheritance.
You may trust your ex to raise your children.
That does not necessarily mean you want your ex controlling the money you leave behind for them.
These are two completely different decisions.
A Guardian and a Trustee Have Different Jobs
The person who takes care of your child is the guardian.
The person who manages money held in a Trust is the Trustee.
They do not have to be the same person.
This can be especially important after a divorce.
You may be comfortable having your child's other parent make decisions about school, activities and everyday life.
But you may want somebody else managing your child's inheritance.
Don't Leave a Large Inheritance Directly to a Child
Minor children generally cannot manage an inheritance themselves.
Instead, your estate plan can provide that your child's inheritance will be held in a Trust.
You choose the Trustee.
You also decide how the money can be used.
Depending on how your Trust is written, the Trustee may be able to use the money for things such as:
- Education
- Healthcare
- Housing
- Transportation
- Activities
- College
- Other important needs
The money belongs to the Trust for the benefit of your child. The Trustee manages it according to the instructions in your Trust.
When Should Your Child Get CONTROL?
Another important question is:
At what age should my child receive the money?
Turning 18 does not magically make someone good with money.
Think about yourself at 18.
Would you have been ready to receive a large inheritance?
Maybe.
Maybe not.
A Trust allows you to decide when and how your child receives CONTROL of an inheritance instead of simply handing everything over at the first possible age.
Your Trustee and Your Ex May Need to Work Together
If your ex is raising your child and another person is serving as Trustee, those two people may have to communicate regularly.
For example, the parent may ask the Trustee for money for a child's education or another expense.
That is why your choice of Trustee matters.
Choose someone who is responsible with money, understands your wishes and can work with your child's other parent.
You Can Protect the Money You Leave Behind
Estate planning after divorce is not only about deciding who gets your property.
It is also about deciding:
Who controls it?
How can it be used?
When should my child receive it?
Those decisions belong in your estate plan.
If you are divorced or separated and have minor children, please call our office. We can help you create a plan that protects your children's inheritance and keeps CONTROL where you want it.
Frequently Asked Questions About a Child's Inheritance After Divorce in Arizona
Can my ex control my child's inheritance after I die?
Not necessarily. An estate plan can provide that an inheritance for a minor child is held in a Trust and managed by a Trustee you choose. The Trustee manages the Trust assets according to the terms of the Trust.
Can I choose someone other than my child's other parent to manage the inheritance?
Yes. The person responsible for raising a child and the Trustee responsible for managing assets held in Trust do not have to be the same person. This allows you to choose someone you trust to manage the inheritance for your child's benefit.
Can a minor child receive an inheritance in Arizona?
A minor child may be a beneficiary, but minor children generally cannot manage an inheritance themselves. Estate planning can provide for the child's inheritance to be held in a Trust and managed by a Trustee.
Can I decide when my child receives control of an inheritance?
A properly prepared Trust can establish when and how a child receives control of Trust assets rather than simply distributing everything at the earliest possible age. The appropriate provisions depend on your estate plan and individual circumstances.
What can a Trustee use my child's inheritance for?
Depending on the terms of the Trust, the Trustee may be permitted to use Trust assets for expenses such as education, healthcare, housing, transportation, activities, college and other important needs. The Trustee must manage the assets according to the instructions contained in the Trust.
Why is estate planning especially important for divorced parents in Arizona?
Divorced and separated parents may need to make separate decisions about who will care for their minor children and who will manage the property they leave for those children. An Arizona estate plan can address these responsibilities and provide instructions for managing a child's inheritance.