Parents often assume that creating a revocable living trust will automatically protect a child’s inheritance, even if the parent remarries. In reality, the situation is far more complex. Whether a trust truly safeguards assets for biological children depends heavily on state law, how the trust is funded, and the rights of a surviving spouse.
A recent article in the New Hampshire Union Leader, “Know the Law: Ensuring Assets Go Where You Want in Your Revocable Trust,” highlights these issues and underscores the importance of speaking with an experienced estate planning attorney. The same concerns arise frequently here in Illinois and in nearly every other state.
Elective Share Laws and Their Impact on a Child’s Inheritance
In many states, including Illinois, a surviving spouse cannot be completely disinherited. Even if a parent’s estate plan leaves all assets to their children, most states allow the surviving spouse to claim an elective share—a statutory percentage of the estate—to ensure they are not left without support.
In some jurisdictions, the elective share is one-third of the probate estate when the deceased spouse leaves children. But here is where things become complicated:
-
Some states include revocable trust assets in the elective share calculation.
-
Others do not automatically treat revocable trust assets as part of the probate estate.
Because laws differ so widely, parents who want to protect a child’s inheritance must understand how their state handles elective share rights.
When a Surviving Spouse Can Challenge Revocable Trust Transfers
If a parent places assets into a revocable trust for their children, those assets may still be vulnerable. A surviving spouse may:
-
Waive testate distribution and instead claim the statutory elective share; or
-
Challenge transfers into the revocable trust if the spouse believes the transfers were made to defeat their elective share rights.
Courts can—and sometimes do—set aside transfers into a revocable trust. When that happens, those assets are treated as part of the probate estate and included in calculating the surviving spouse’s share. This could greatly reduce what ultimately passes to the children.
Moving Between States Can Change Outcomes
Parents who move from one state to another are often surprised to learn that their existing estate plan may function differently after relocation. For example:
-
A parent may leave a state where revocable trust assets are excluded from the elective share,
-
Only to move to a state where revocable trust assets are included.
In such cases, the portion of the revocable trust considered part of the probate estate becomes available to the surviving spouse under that state’s laws. This can disrupt an otherwise carefully planned effort to protect a child’s inheritance.
Unfunded Trusts Offer No Protection
A revocable trust only controls assets that are properly retitled or beneficiary-designated into the trust. If a parent forgets to transfer:
-
Bank accounts
-
Real estate
-
Investment accounts
-
Other individually owned property
those assets remain in the parent’s name and will pass through probate. As part of the probate estate, they are subject to the surviving spouse’s elective share rights—potentially reducing what children receive.
Retirement Accounts and the Surviving Spouse’s Automatic Rights
Retirement accounts present another challenge. Under federal law, surviving spouses are typically the default beneficiary of:
-
403(b)s
-
Certain pension plans
Unless the spouse signs a valid waiver, they remain the only permissible beneficiary. This rule can override even a carefully crafted estate plan and may frustrate efforts to protect a child’s inheritance.
Prenuptial Agreements and Second Marriages
For blended families or parents entering a second marriage, concerns about unintentionally disinheriting children are common. While thoughtful estate planning can address many of these issues, a prenuptial agreement provides an additional layer of protection. These agreements can clarify:
-
What each spouse owns,
-
What each spouse may receive at death or divorce, and
-
What is earmarked for each spouse’s children.
Discussing these matters before the wedding often prevents future misunderstandings and ensures both partners begin the marriage with clear expectations.
Consult an Estate Planning Attorney to Protect Your Child’s Inheritance
The greatest risk to a child’s inheritance often comes from assumptions—believing a revocable trust provides ironclad protection when state law may say otherwise. Because every jurisdiction handles elective share rules differently, and because blended-family planning is rarely simple, parents should consult an experienced estate planning attorney in their state.
With proper planning, your wishes can be honored, your spouse can be provided for appropriately, and you can confidently protect your child’s inheritance.