By Brian Figeroux, Esq.

Estate planning is a critical step in ensuring your wealth is passed down according to your wishes. If you want to leave an inheritance for your children but not their spouses in New York State, careful legal planning is essential. Without the right protections in place, assets you leave to your children could become marital property, subject to division in a divorce. Below are some key strategies to ensure your assets remain within your bloodline.

1. Use a Trust Instead of a Will

A revocable or irrevocable trust is one of the most effective tools for protecting an inheritance from spouses. Unlike a will, which distributes assets outright, a trust allows you to control how and when your children receive their inheritance.

• Revocable Trust: This type of trust lets you retain control of assets during your lifetime. You can amend or revoke it as needed. However, it may not offer full protection from creditors or spouses.
• Irrevocable Trust: This trust cannot be changed once established, offering stronger asset protection. It ensures that assets remain in the trust and are distributed under the terms you set, keeping them separate from your child’s marital property.

By naming a trustee (rather than your child) to manage the inheritance, you prevent your child from inadvertently commingling it with marital assets, which could expose it in a divorce.

2. Keep Assets Separate

New York law considers inheritances to be separate property, meaning they are not automatically subject to division in a divorce. However, if the inheritance is commingled with marital assets—such as being deposited into a joint bank account or used to purchase a shared home—it can lose its separate status.

To protect an inheritance:

• Instruct your child to keep inherited funds in a separate account under their sole name.
• Advise them against using inherited money for joint expenses, mortgages, or investments with their spouse.
• Ensure they avoid adding their spouse’s name to inherited real estate or financial accounts.

3. Include a Spendthrift Clause

If you use a trust, including a spendthrift clause prevents beneficiaries from transferring or assigning their inheritance to others, including a spouse. This protects the assets from creditors and divorce settlements, ensuring that only your child can access the inheritance.

4. Consider a Prenuptial or Postnuptial Agreement

Encouraging your child to sign a prenuptial or postnuptial agreement with their spouse can help safeguard their inheritance. A prenup, signed before marriage, or a postnup, signed after, can outline that the inheritance remains separate property. While not foolproof, these agreements can reinforce the protections you put in place.

5. Use Lifetime Gifting Strategically

Another strategy is lifetime gifting. Instead of leaving a large inheritance upon death, you can gradually gift assets to your child in a way that minimizes estate taxes and reduces the risk of commingling with marital property. However, these gifts should still be kept in a separate account or trust.

Conclusion

If your goal is to leave an inheritance only to your children—not their spouses—you must plan carefully. Trusts, separate accounts, spendthrift clauses, and prenuptial agreements all offer strong legal protections. Consulting an estate planning attorney in New York State is the best way to ensure your wealth is preserved for future generations according to your wishes.

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