Worried that your child’s inheritance could end up in the hands of an ex-spouse?
You’re not alone — many Georgia parents don’t realize that an inheritance can become marital property the moment it’s mixed with joint assets.
In this guide, you’ll learn exactly how to protect your child’s inheritance from divorce in Georgia using the right kind of trust. We’ll explain how inheritance trusts and divorce actually work under Georgia law, and walk you step-by-step through setting up a trust to protect assets from divorce so your legacy stays secure for generations.
Watch How To Protect Your Child’s Inheritance From Divorce In Georgia
Like a shield forged from Georgia law itself, this video shows exactly how to divorce-proof your child’s inheritance for life. Tap play to see the simple trust structure that keeps your family’s legacy safe no matter what the future brings.
Why Your Child’s Inheritances Are at Risk For Divorce
Georgia follows equitable distribution, meaning the court divides marital property “fairly” during divorce.
Inherited money is technically separate property, but that protection disappears if your child:
By taking proactive measures, you can effectively ensure that you protect your child’s inheritance from any potential claims during a divorce.
- Deposits inherited funds into a joint account
- Uses inheritance money to pay marital debts or buy joint property
- Adds a spouse’s name to inherited real estate or investments
Once that happens, the inheritance becomes commingled, and courts may treat it as marital property.
Proving that inherited assets are protected from divorce afterward is extremely difficult and expensive.
The Solution: A Lifetime Beneficiary Trust
The most effective trust to protect your child’s inheritance from divorce is called a Lifetime Beneficiary Trust (LBT).
Instead of leaving your child a lump sum, you can leave their inheritance in trust for their lifetime.
Here’s how it works:
- The trust owns the assets — not your child personally.
- Your child can use the funds for health, education, living expenses, or investments.
- If your child ever divorces, the trust’s assets are legally separate property, fully protected from equitable division.
This structure is built inside your Revocable Living Trust in Georgia. Upon your death, your revocable trust automatically funds an irrevocable inheritance protection trust for each child — creating a lifelong financial firewall.
If you’re new to this concept, you can learn more in our article on how to set up a trust in Georgia.
How It Protects A Child’s Inheritance
Imagine leaving your daughter $500,000.
- Without a trust: She puts it in a joint bank account, pays off the marital mortgage, and invests the rest with her spouse. Years later, she divorces — and her ex claims half the value. The inheritance is gone.
- With a Lifetime Beneficiary Trust: The money stays inside the trust, managed by a trustee. Your daughter can still use it for living expenses or education, but the funds remain legally separate. When divorce happens, that inheritance stays protected.
This is called beneficial use without ownership — your child benefits from the inheritance without legally owning it, keeping it beyond the reach of divorce courts.
Setting Up a Trust to Protect Your Child’s Inheritance From Divorce In Georgia
These are the steps to set up a trust to keep your child’s inheritance from being taken in a divorce settlement.
1. Create a Revocable Living Trust.
This is your foundational estate planning document. It lets you direct how and when assets are distributed and keeps your estate private. You can see a detailed walkthrough of how it works here: Revocable Living Trust Georgia.
2. Add instructions for a Lifetime Beneficiary Trust.
Include language that each child’s inheritance will be held in trust for life instead of distributed outright. Upon your death, the trust becomes irrevocable — giving your family automatic protection. Learn more about how revocable and irrevocable trusts differ in our guide on Revocable vs. Irrevocable Trusts in Georgia.
3. Choose an independent trustee.
To make inheritance trusts and divorce fully separate, pick someone neutral — a professional or corporate trustee. If your child controls the trust entirely, courts could treat it as personal property.
4. Use fully discretionary language.
Give the trustee full discretion over distributions. Avoid the “health, education, maintenance, and support” (HEMS) standard, since Georgia courts can interpret that as an enforceable right.
A fully discretionary standard prevents anyone — even a spouse seeking alimony — from forcing distributions.
5. Add remainder beneficiaries.
When your child passes, the trust can distribute what’s left to your grandchildren. This prevents “sideways inheritance,” where your wealth could pass to an ex-spouse’s family through remarriage.
If you’re transferring real estate into the trust, review our guide on how to put a house in a trust without a lawyer in Georgia.
Common Mistakes That Undo Divorce Settlement Protection
- Naming your child as trustee of their own trust
- Requiring automatic distributions or fixed payouts
- Keeping the trust revocable after your death
- Mixing trust assets with joint or personal accounts
Each of these mistakes can destroy the protection and make your child’s inheritance vulnerable to division in divorce.
More Than Divorce Protection
A properly drafted asset protection trust in Georgia does more than protect inheritance from divorce. It also safeguards your child’s wealth from:
- Lawsuits and creditor claims
- Bankruptcy or failed business ventures
- Financial immaturity or reckless spending
- New marriages or blended-family complications
Your children enjoy financial security — without ever risking the family legacy you built.
If long-term care or Medicaid recovery is also a concern, you may want to explore a Medicaid Asset Protection Trust in Georgia.
Why Parents Choose This Structure To Protect Their Kids
Parents don’t create trusts to protect assets in divorce because they expect their children to fail — they do it because they want to preserve what they’ve built.
A trust to protect your child’s inheritance from divorce ensures that what you leave behind stays in your family line.
It offers your children lifelong stability and your grandchildren a foundation for the future.
You can also include supporting documents, like a Financial Power of Attorney and an Advance Healthcare Directive in Georgia, to complete your estate plan.
Quick Recap
- A lump-sum inheritance can become marital property through commingling.
- A trust to protect inheritance from divorce keeps those assets legally separate for life.
- The trust owns the assets; your child only benefits from them.
- Choose an independent trustee and discretionary distribution language for full protection.
- Add remainder beneficiaries to ensure your wealth stays in your bloodline.
With the right planning, you can make your child’s inheritance divorce-proof, legally separate, and completely protected — no matter what the future brings.
For Georgia families ready to start, our estate planning attorneys in Atlanta can help you design a trust plan that fits your family’s goals.