Revocable Living Trusts and Divorce
Question: In 2003, I established a revocable living trust. Since that time, my son has divorced. If my wife, son, and I are deceased, will his children automatically receive his share?
Answer:
The Rules: You or an agent authorized by you under a comprehensive power of attorney can change a revocable living trust at any time. The assets will automatically pass to your son’s children if the trust leaves your assets to him “per stirpes.”
How It Works: You should periodically review your trust with an experienced attorney who will look at whether and to what extend the trust is funded, i.e. what assets are held inside and outside the trust. Only the assets actually titled in the trust and assets naming the trust as beneficiary (retirement benefits, for example) are affected by the trust. Any assets not titled in the trust should be included in a valid will in order to provide for their distribution.
The Strategy: Your son should execute a will creating a trust for his children. Someone other than his ex-wife should be the trustee, especially if he has any concerns that she may use his assets to provide for the children while exhausting their inheritance. You may wish to amend your trust to provide for spendthrift protection against his creditors and possibly his ex-wife.
