How Can I Divorce-Proof My Child’s Inheritance?
Clients often lower their voices before asking: “Can I keep my son-in-law from receiving my daughter’s inheritance?” The question may feel uncomfortable, but it is sensible. Your intention is that the money you spent your life earning and saving is for your children and your grandchildren.
Under Virginia law, inherited property generally begins as the receiving spouse’s separate property. Protection can erode, however, if a child deposits inherited funds into a joint marital account, retitles assets jointly, buys jointly-owned property or mixes the inheritance with marital funds. Ask my family law partners about the complexities of tracing, commingling and transmutation rules, and the ensuing litigation. You can avoid those rules and mitigate your child’s lack of a pre-nup as to the money you leave them.
Instead of distributing a child’s inheritance outright, a revocable living trust can direct that child’s share into a separate lifetime subtrust. Assets remain titled in the subtrust rather than in the child’s name. The trustee (often your child) may distribute funds for such child’s health, education, maintenance and support (HEMS) while undistributed assets remain inside the subtrust. The subtrust can grow and invest the inherited assets, yet still be available whenever the child decides they need a distribution. And if you have three children, then the living trust will spawn three lifetime subtrusts on your passing. Each child will be in charge of their subtrust.
The VA Trust Code has long recognized spendthrift provisions and protections. It’s the best of both worlds to give your child access and discretion over their inheritance, but also creditor protection (spouses or otherwise).
A simple will or living trust leaving assets outright cannot provide these safeguards. No structure eliminates every risk, and there are tradeoffs, but a lifetime subtrust can make an inheritance harder to divide in divorce.
Justin T. Banford, a shareholder at Bean, Kinney & Korman, focuses his practice on corporate and business law. Serving as outsourced general counsel, he has helped entrepreneurs launch over 500 companies. He routinely guides government contractors and business owners through scaling, exits and comprehensive estate and succession planning.
Awards & Honors:
– Arlington Magazine Top Attorney (2024): Business Corporate
– Virginia Business Legal Elite (2025): Business Law
– The Best Lawyers in America® (2027): Trusts and Estates
– Virginia & Washington, D.C. Super Lawyers Rising Star (2019–2020): Business/Corporate