By Sarah Stewart Legal Group, PLLC

When we make our estate plans, most of us plan for what we hope, or expect, to happen.  We plan as though everything will march along merrily as it has until this point.  Our marriages will last and our children’s marriages will last.

The reality is, about 50% of American marriages end in divorce.  If you want to leave a significant amount of wealth to your children, you need to plan for the chance your child’s marriage will end.

If you have a trust, a strategy that can keep your children’s inheritance out of the hand of creditors and ex spouses is to give Trustees full discretion over distributions.  This way, heirs don’t receive one, lump sum that spouses can seek in a divorce.

Though issues can come from giving Trustees so much discretion, there are ways to structure a trust to allow for a Trustee’s removal if the Trustee acts unreasonably and to allow beneficiaries to request assets as needed from the Trustee.

Many Baby Boomer clients may find this type of planning beneficial for their goals.  Many Boomer clients have children in their 30s or 40s who are married, have been married, or will soon be married and must plan realistically for the possibility of divorce.  Also, Boomers have started a trend of delaying distributions to their children until the children are in their 30s or 40s, later than the usual age of 25.

Boomers tend to see younger generations as more entitled and lazier than their own.  Because of this, they want to protect their children from themselves by holding back distributions and ensuring distributions can be lost in a divorce.

Even with this level of planning, the children need to be educated on how to keep their separate assets separate.  If distributions are made from the Trust to the children, children should keep these distributions separate and not deposit them in a joint account with a spouse or significant other.