As the parent of an adult child, you know you typically can’t make them do something they don’t want to – even if you know it’s what’s best for them.
For example, if they’re planning to get married, you may feel strongly that they should get a prenuptial agreement. This can protect whatever assets they’re bringing into the marriage, as well as any inheritance you or other family members leave them in the future.
Inheritances are typically considered separate property that doesn’t have to be split with a spouse in divorce. However, it’s easy for an inheritance to become “commingled” with marital property. If that happens, your child’s spouse may be able to claim part of it in a divorce – unless there’s a prenup that states otherwise.
If your child and/or their fiancé(e) are set on marrying without a prenup, it’s crucial not to pressure them – especially your future in-law. That could make the prenup invalid if it ever needs to be used.
There are, however, ways to “divorce-proof” your child’s inheritance through smart estate planning. This is typically done by placing your child’s inheritance in a trust that keeps the assets out of their direct control.
How does a Tennessee DAPT work?
Tennessee law allows people to create what’s known as a domestic asset protection trust (DAPT). This is a type of irrevocable trust that protects assets not just from soon-to-be-ex spouses, but also from creditors and judgments in civil litigation.
The assets in a DAPT are controlled by a designated trustee who makes distributions to the beneficiary – typically based on the instructions provided by the person who created the trust (the grantor). Because the beneficiary has no direct access to the trust assets, they aren’t eligible for division in a divorce.
A DAPT gives Tennessee parents an alternative to leaving a child out of their estate plan if they don’t get a prenup. To determine whether a DAPT is right for your goals and wishes and explore other estate planning tools, it’s important to have experienced estate planning guidance.