Attention parents with assets: Tell your children they must have a prenuptial agreement! And when they respond “No, I love him, that is not romantic, we will be together forever!”……panic!!! Then take a breath…PANIC a little more, then contact your T&E attorney to discuss how to protect your family assets using a family trust with a suitable trustee.
The Family Court (more appropriately called the “Divorce and Fleece Court”) is known as a “court of equity”, meaning it can look at any factor relating to assets and income, and make a completely subjective (some may say arbitrary) decision as to who gets what. When a child is too shy or stubborn to get a prenuptial agreement, it is your job to protect your family’s money. Even though gifts to a child are not a part of the familial assets, these gifts often get deposited in joint bank accounts, are comingled with other marital assets, and effectively lose their protection in a court of equity.
Part of parenting is allowing a child to learn his own lessons about his money. But parenting is NOT about them learning lessons about your money, so put a big wall in between your money and your future ex-in-law.
Instead of having a Will that leaves your estate to your child when they reach a certain age, you may want a trust with a trustee (other than the married child) to determine when and how money is distributed to the child. You can give this trustee the ability to only distribute income to the beneficiary, or not distribute anything if the couple is not living with one another. You may state the Trustee can pay for grandchild education expenses or your child’s legal and personal expenses directly instead of having them distributed first to the child. Your trust can even state that the Trustee may distribute all trust principle when a post-nuptial agreement is executed.
While it may seem impossible in a world that is hyper-sensitive toward any deviation in ultra-liberal social standards, a trust can be drafted to limit a beneficiary’s access if he/she:
- marries outside of the family’s faith
- is in a same-sex pairing
- is registered to a certain political party
- dates people with differing skin color
- has children that are not named after you
- does not execute a favorable pre/post-nuptial agreement with a spouse
Simply stated: The money in a trust can remain under your complete control after you die if the trust is drafted correctly.
This is not to say a trust is a proper substitute to a pre nup: Anything you have already left your child is fair game, But what a family trust can do is help you avoid any future mistakes that your child may make.
