Protecting Inheritance from Divorce Claims: Understanding "Restrictions Applicable to a Married Beneficiary"
James Nici
When planning your estate, one of the key considerations is protecting the inheritance you leave for your descendants from potential risks — including claims made during a divorce. To address this, we include a critical safeguard in estate plans:
"Restrictions Applicable to a Married Beneficiary."
These provisions are designed to help ensure that the wealth you’ve worked so hard to build stays with your descendants, even in the event of a divorce. Here’s what you need to know about this important feature.
The Divorce Dilemma
In a notable 2016 Florida case, a husband sought to classify his wife's separate irrevocable trust as a marital asset. If successful, the trust’s assets would have been divided equally during their divorce. Fortunately, the Florida appellate court ruled that the trust was not a marital asset, allowing the wife to retain it as her separate property.
However, not all jurisdictions are as clear-cut. In some states, courts have ruled differently, putting inherited assets at risk during divorce proceedings.
Why These Provisions Are Critical
Because we cannot predict where your descendants will live or how divorce laws might affect their inheritance in different jurisdictions, these provisions are an essential safeguard. While no strategy can guarantee complete protection, taking proactive steps to express your intent and establish clear guidelines is far better than leaving your legacy vulnerable.
Key Features of the Restrictions
The "Restrictions Applicable to a Married Beneficiary" provisions include:
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Clear Intent to Protect the Inheritance
The trust explicitly states that its assets are to benefit your descendants and not their spouses. It disavows any intention to support or enhance the marital lifestyle of a descendant’s spouse. -
Independent Trustee Oversight
To ensure these protections are implemented effectively, the trust appoints an Independent Trustee. This individual has the authority to follow the outlined procedures, ensuring that your wishes are carried out. -
Procedures to Mitigate Risk
The provisions include specific guidelines for managing distributions to minimize the risk of assets being classified as marital property.
