How can I give $600,000 to my kids and ensure they don’t lose it if they get divorced?

I don’t need money. I have a good pension and my own property, so I would like to use these proceeds to put my children on the property ladder, and in fact pass on to them a portion of their future inheritance when they need it most. Both are renters but eager to buy, and both are married or partnered.

My question is how do I protect myself and them. If my husband dies before me, I will want to return to the States, near one or another child, and that may require raising capital—otherwise my children may have to provide me with a spare room or two. . Plus, I’d like to make sure that they can keep that gift for themselves in the event of a divorce, without being so obvious and nasty about it. Is there a joint buying scenario — or two, because I want to treat them as equals — that would make sense?

the father

Related: Trusts are useful for almost everything in estate planning

dear father,

If there is a 50/50 chance that you will return to the United States, think twice before donating the entire $667,000 to your children. Once you give it up, it’s gone forever.

First, financial matters. The current estate tax exemption — the amount you won’t owe federal estate tax when you die — is now $12.9 million for individuals, up from $12.06 million in 2022. That exemption is $25.84 million for married couples, up from $24.12 million a year earlier. However, those rates will expire at the end of 2025. Without congressional action, those exemptions will revert to what they were before the Tax Cuts and Jobs Act of 2018, meaning they will be cut by about half.

An inheritance received by one person in marriage is generally considered to be separate property, as is property owned by one of the spouses before marriage. But this could change. Here’s scenario #1: You give a financial gift to your unmarried child, who buys a house before marriage, but your child’s partner contributes to the renovation of the property, thus converting it from separate ownership to joint ownership. Scenario #2: You give the money to your married child, who decides to put it in a joint bank account, thus making it a joint asset.

You can, as you suggest, buy a property with your children. There are several types of joint ownership agreements. Joint tenancy with right of survival means that if one person dies, the owner or other owners will inherit their share and the property will not be subject to probate. On the other hand, with joint tenants, if one of your children dies before you, their share will be examined and distributed to their heirs. Such decisions should be made with the help of a good estate planning attorney.

There are measures you can take to keep this money in the sole hands of your children, but there is not much you can do once you hand it over. Creating a revocable trust for your children would allow you to dictate how the money is spent and who has access to it, and would keep it out of the reach of their partners — if that’s their wish, too. An irrevocable trust, which is used if your estate exceeds the lifetime exemption, is often used by the wealthy (Exhibit A: British royal familyAnd what you say does not apply to you.

Remember to review your last will, testament, and the rules of any family trust every five years. There may come a time when you approach your children’s partners and want to include them in your will, when you want to set up trusts for their children. Fair warning: Managing such trusts doesn’t usually come cheap.

Ultimately, there is only a limited amount of control you can have over your children, and over the money you give them. If you want more control, keep all or part of it. And never give up your entire kingdom.

Readers write to me with all sorts of dilemmas.

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