As a parent, you want what’s best for your child. You may have worked painstakingly to provide generational wealth to give your child a head start in this world, but a divorce can quickly derail those plans.
Legal Effects of Divorce on Property
Colorado is an equitable distribution state for property division during a divorce. Under this system, courts try to divide marital property equitably – but not necessarily equally – among the spouses.
Courts consider various factors when determining equitable distribution, including the length of the marriage, child custody arrangements, and the earning capacities of both spouses. Of course, spouses can alternatively reach an amicable settlement agreement regarding how to divide the property if they prefer not to have the court make these important decisions.
An inheritance to a child can become a point of contention during the divorce process. The spouses may no longer agree on providing an inheritance to their children or on the amount to be given.
This issue is often highlighted in blended families where only one spouse is the biological parent of the child who would stand to receive an inheritance. Courts might not consider that you had property that you intended to pass to your children, but instead only focus on dividing up that property fairly between you and your spouse.
Steps to Protect Your Child’s Inheritance
Here are some proactive steps you can take to protect your child’s inheritance:
Follow the Terms of Your Prenuptial Agreement
If you have a valid prenuptial or postnuptial agreement, look to the terms of this agreement to determine what the arrangements are that you and your spouse agreed to before things fell apart. Right now, it might be easy to argue over everything, but you may have reached amicable terms before this period of contention.
Keep Inheritance Property Separate
It will be easier to argue that the property was intended for a specific purpose, such as your child’s inheritance, if this property is segregated from other property. Suppose your grandmother left you a sizable inheritance, but you want to pass that property on to your child.
By keeping that property in a separate bank account or in another asset that is not tied together with your marital assets, you can better protect the separate property characteristics of this property. However, when you mix separate property and marital property, it is easier for the identity of the property to get confused and more difficult to divide.
Consider Placing the Property in a Trust
You might wish to place your child’s property in a trust. Taking this proactive step helps you identify specific property you want for your child and also sends the message to your spouse that if they try to take away this property, they’re taking it away from your child.
A trustee manages the terms of the trust according to the terms set out by the trust maker or makers when establishing the trust. Funds that are not part of the marital estate are generally not divided during the divorce and can be passed directly to a child based on the trust’s terms or after the parent’s death.
Contact Us Today to Speak with an Experienced Family Law Attorney
Speak to an experienced divorce lawyer from Stahly Miner LLC for help and legal advice about protecting your child’s inheritance during a divorce. You can schedule a confidential consultation by calling (303) 797-2900.