You need a new estate plan if you get divorced or break up with your partner!
Estate planning becomes even more important after a break-up. In the event of a divorce or a break-up, couples need to decide what will happen to their joint assets, but even more importantly, their children. The problem is that an estate plan made by a couple while they are together is likely vastly different from one made after they split up.
No one ever plans to break up, but it happens all the time. When you are married, your estate plan includes your spouse and any children you may have together. But when you get divorced, those plans change. The same goes for unmarried couples that break up but have children together. You need to make new estate plans that reflect your new family situation.
The Blac Chyna lawsuit against the Kardashians is a recent example of the importance of estate planning in the event of a break-up. Chyna, who is the mother of Robert Kardashian's child, Dream (pictured left), sued her ex-boyfriend for damages, along with other members of the Kardashian family. She has a separate suit against Rob, alleging he published nude photos of her as a way to get “revenge” against her (See People magazine article HERE).
Regardless of the outcome of the lawsuits, and even regardless of who is right and who is wrong, it’s safe to say that neither Rob nor Chyna want the other one controlling their estate, even if it’s meant to benefit their child.
That’s perfectly reasonable - who wants an ex-spouse to control their assets if they die?
In the most recent lawsuit, Chyna sued the Kardashians for allegedly interfering with and hurting her career. She says the family has worked to sabotage her reality programs, entertainment deals, and financial opportunities. Meanwhile, the family is arguing that Chyna abused Rob, held a gun to his head, and attempted to strangle him. Now, would Rob want Chyna to have control over his estate if he passed away? With full control over the money that would be for their child? One can assume not.
This case highlights the importance of having an estate plan in place, regardless of your relationship status. If you are going through a breakup or divorce, it is crucial to consult with an estate planning attorney about any shared property and determine custody arrangements for children. With the help of an estate planning lawyer, you can be certain that your wishes will be carried out after a break-up or divorce.
If you fail to plan, then the state you live in has an estate plan already written for you. That plan is called the “Intestacy law” and it decides where your property will go, whether you want it that way or not. Those laws can give your entire estate to your children if you pass away, which doesn’t sound that bad, but you could be in for a shock. If your children are under 18, their legal guardian can have control over all the inheritance, with no oversight whatsoever. That might be fine for some people, but for others, the last thing they want to see is their ex-spouse being in charge of their estate. The ex-spouse can use the money for any purpose, such as taking their new significant other on vacation!
How do we prevent that?
We use a family trust. A family trust can own property and assets on your behalf and makes sure that the funds are used in the manner of your choosing. You choose a trustee to handle the trust funds when you’re gone, and it can be someone other than your ex-spouse, even if your ex is the legal guardian for your kids. The trustee that you select has full control over how the trust's assets are used. The trustee can make sure that the money is used for the benefit of the children, and not for any other purpose.
A family trust not only lets you determine who will control the money for your children, but it can also set the rules for disbursements, including payments to the children over time instead of lump-sum. Most children, even at age 18 or older, don't have the life experience to deal with large sums of money. A family trust can release the funds a little at a time so that the kids can learn how to manage it as they grow. That's much better than risking their entire inheritance by giving it all to them at 18, and having them blow it all on cars and clothes! My own son is a very smart kid, but I know that the thought of owning a Lamborghini might cloud his judgment with money that’s supposed to pay for college!
Whether you're going through a difficult divorce or simply breaking up with your long-term partner, a family trust can be an essential tool, regardless of what happens in your relationship. With its flexible rules and provisions for disbursements over time, a trust can help your children receive the support they need, without putting them in charge of the funds before they are ready.
If you want to prepare for the future, having a family trust in place can give you peace of mind and provide the security that your children need. Whether you are looking to set up a trust for your own estate or even help another family member, consulting with an estate planning attorney can help you with the best course of action for your unique situation. There are many different variations of family trusts – some help reduces estate taxes while offering other benefits. It’s hard to know which trust is the right one for you, which is why an experienced estate planning attorney is essential.
Remember, estate planning is not only for the wealthy and famous - it's for anyone who wants to ensure their loved ones are taken care of in case something happens to them!
We "regular people" still need to plan for our children and our assets, or you risk having your ex's new squeeze driving around in a new car that you paid for! So don't wait - consult with an estate planning attorney today and start setting up a family trust to protect your kids!
Want to start planning for your future?