The Use of Constructive and Other Trusts to Protect Your Children’s Savings in NJ Divorce
Read on to learn more about how to protect your children’s rightful savings from an ex. Linden Divorce and Family Lawyer is here to protect you and your children.
Going through a divorce is an often messy and complicated process. Shuffling joint savings and assets into compartments that are fair to each spouse and protect the welfare of their children require expert navigation and legal support. Determining what alimony and child support payments are required is one step of the divorce process, and it is expected that the ex-spouse will abide by those determinations, but that is not always the case.
In order to properly manage your estate and the division of assets during a divorce when children are involved, it is important to set up a trust for your children’s finances and inheritances. Setting up a living trust as part of the divorce process is essential to protect your children’s financial future, but it is not always done. So what happens if you haven’t set up a trust to house important savings for your children, like college funds, and your ex not only states that they can no longer afford to pay alimony and child support given a change in their finances, but they are found to be using their children’s savings to foot their personal bills?
Setting up trusts for your children during a divorce
The best way to protect your children’s savings is to set up a trust. A living trust does two things: it protects your children’s finances from the heavy hands of a disgruntled ex, and it also protects your children from their own immaturity. A common mistake that newly divorced people make when estate planning is that, in removing their ex as their primary beneficiaries, they automatically name their children. For one thing, doing so could be illegal, as young children are not allowed to own assets; those children would have to be overseen by what New Jersey law calls a guardian of assets. The court generally appoints the surviving parent to be the guardian of assets in the case that you die, so those funds would be in your ex’s hands. Is that something you want? Another consideration of having a child named as your beneficiary is what your child would do given those assets at age 18. Do you think they would be mature enough to handle those finances wisely?
One way to correctly navigate this naming of your child as a beneficiary is to name a trust in their name as the beneficiary of your assets, not the child themself. A trust is strictly protected and may only be accessed by named individuals. As such, they are protected both from sneaking exes and the immature hands of your child. The funds within a trust may even stay in it for the entire lifetime of your child, so they need not carry the burden of financial decision-making at the moment the funds within the trust become available to them.
In order to have specific control over the assets, you intend for your child to have, setting up a trust for your children is always a good idea. You are able to control who the trustee will be, how all assets will be divided among your children and the specific age at which your children will gain access to the assets.
Using a constructive trust to regain funds allotted for your children
Sometimes, funds that are not protected by trusts are tampered with by an ex-spouse who needs money. If your ex declares that they are not able to meet alimony and child support payments because of a change in finances, and you discover that they’ve dipped into joint accounts reserved for your children’s future needs, you have the legal right to impose a constructive trust over those assets. A constructive trust is basically a financial restraining order that blocks them from accessing the share of those saved assets that are legally theirs but that is reserved for the children’s future. In court, the ex-spouse seeking a constructive trust will need to prove a wrongful act such as “fraud, mistake, undue influence, or breach of a confidential relationship which resulted in the transfer of property.” The plaintiff will also have to prove that the ex enriched themself by transferring those funds out of the joint savings.
The result of obtaining a constructive trust is that it secures future payment of child support and other financial requirements.
Consult a Union County NJ Divorce Attorney to Guide You Through the Proper Steps
At the Law Office of Edward S. Cooper, our team of family law attorneys supports clients Clark, Roselle, Roselle Park, Garwood, Elizabeth, and throughout Union County, Essex County, and northern Middlesex County in all divorce matters, including the imposition of constructive trusts if necessary.
To schedule a consultation with an experienced team member today regarding your divorce finances, please contact us online, or through our Linden, NJ office at (908) 481-4625. We´ll be happy to work with you.