Estate Planning for Divorced Parents: Protecting Your Child’s Future

When you’re a divorced parent, estate planning takes on a unique urgency. You want to ensure your child is financially secure if something happens to you—but you may also have serious concerns about your ex-spouse managing that money. Whether due to past financial irresponsibility, strained relationships, or simply differing values, many parents want to provide for their children without giving their co-parent control over the inheritance that is intended.

Fortunately, estate planning offers powerful tools to help you do just that. Chief among them: trusts.

Why a Will Alone May Not Be Enough

A common misconception is that a simple will is sufficient to direct your assets to your child. While a will can name your child as a beneficiary and nominate a conservator, it doesn’t prevent a court from appointing your ex-spouse as the conservator of the child’s inheritance if you pass away while your child is still a minor.

This is where a trust becomes invaluable.

Trusts: Flexible, Protective, and Accountable

A trust is a legal arrangement that allows you to transfer assets to a trustee, who manages them for the benefit of your child (the beneficiary). In most cases, people create a trust during their lifetime that becomes irrevocable upon their death.  This arrangement gives you maximum flexibility to modify the terms of the trust during your lifetime, while offering far more control over how and when your child receives the money, as compared with a will.

Here’s how a trust can help you:

1. Avoiding Co-Parent Control

By naming a trustee—someone you trust to manage the assets—you ensure that your ex-spouse has no direct access to or control over the funds. The trustee can be a trusted friend, family member, or even a professional fiduciary or institution. Their legal duty is to act in the best interest of your child, not the co-parent.

2. Tailoring Distributions to Your Child’s Needs

Trusts offer flexibility in how funds are distributed. You can specify that the trustee use the money for your child’s education, healthcare, housing, or other needs. You can also set milestones—such as releasing a portion of the funds when your child turns 25, 30, or graduates from college—rather than giving them a lump sum at 18 or 21.

This approach helps protect your child from the risks of receiving a large inheritance before they are mature enough to handle it responsibly.

3. Ensuring Accountability

Trustees are held to a high standard of fiduciary duty. They must manage the trust assets prudently, keep detailed records, and provide regular reports. If they fail in their duties, they can be removed or even held legally liable. This built-in accountability gives you peace of mind that your child’s inheritance will be managed with care and integrity.

Additional Considerations

• • Letter of Intent: You can include a letter of intent with your trust to guide the trustee on your values and wishes for your child’s upbringing and financial support.
  • Life Insurance: Many parents fund their trust with a life insurance policy, ensuring that sufficient resources are available for the child’s care.
  • Proper Funding: Your trust will only control trust assets.  Creating the trust is just the first step in ensuring that your wishes are carried out.  You need to ensure that your trust is properly funded.  This is done by transferring certain assets to the trust during your lifetime, and completing necessary documentation and designations to direct other assets to your trust upon your death.

Final Thoughts

Estate planning as a divorced parent isn’t just about dividing assets—it’s about protecting your child’s future. A well-crafted trust allows you to provide for your child while keeping control out of the hands of someone you don’t trust. It offers flexibility, accountability, and peace of mind.

About the Author:

Ryan Hulst is the founder of Grand Traverse Elder Law and one of our Empowerment Ambassadors. A veteran himself, Ryan is dedicated to helping fellow veteran’s and their families plan for the future.

Ryan Hulst
Grand Traverse Elder Law
231.714.4501
ryan@gtelderlaw.com