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Episode 39 Transcript: Securing An Inheritance Through Divorce


Today’s mini episode is on leaving money to your kids, and more specifically, on the commitment by one or both spouses, in a divorce agreement, to leave often a certain percentage of their estate to their kids.

We touched on this briefly in the estate episode, but I just want to highlight for you that, sometimes, parents who are negotiating a divorce settlement will have, as a condition of that settlement, the commitment by one or both parents to leave at least a certain percentage of their estate to their children.

The idea behind that is that, listen, often, when people are divorcing, they move on to being in another relationship, to have another family, and that the parents or the spouses of the original family don’t want their kids to be left out in the cold just because mom or dad moves on to have another relationship, and to have more children. So, this is a way to protect your, or your spouse’s, commitment to your kids within your divorce agreement.

The one word of caution that I – or two words of caution that I – will offer, are, one, it is uncommon for this to be a legal requirement, under state divorce law. So, I don’t know of a state that requires parents, under their divorce law, as part of their divorce agreement, to commit to leave at least 25% of their estate to their children.

This is often – and again, consult with your own mediator, or attorney on this, but this is often – something that’s purely an add-on, that is negotiated between the spouses, and is not something that would otherwise happen in court. So that’s one word of caution. But it doesn’t make it a bad thing.

The other thing though to be aware of is that it can be hard, in the present day, to look 10 or 15 years into the future and know that something will feel fair and workable to you in the future. So you really want to – even if you think, “I’m never getting married again. You couldn’t pay me. Never want to have more kids” (and that may or may not be you), but if you are thinking that and think, “Well, fine, I’ll just commit to leave 100% of my estate to our kid, because who else would I ever want to leave my estate to?” – you can absolutely do that, in the future. But you want to think twice, you want to consult with your own attorney or mediator, about whether you want to make that a legal commitment in your agreement. Or, whether you want to, truly, in your agreement, just to have a floor for what you’re committing to leave to your kids, and then have the opportunity and the option down the road, as you see how your life unfolds, to leave, indeed, 100% to your kids, or if you have a second family, to also include that family in your estate planning.

This concludes our mini episode on leaving assets to your kids in your estate. I hope this was helpful for you.

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