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Periodically reviewing and updating your estate plan is as important as executing it in the first place. One event that should trigger a review of your estate plan is the marriage or divorce of one of your children. Some parents may wish to keep their children’s spouses from inheriting anything from their estate.
First, it is important to remember that your child’s spouse is not an automatic heir to your estate, because they are not related by blood. This means they do not have any claim under Hawaii’s intestacy statute to demand a share of your estate.
However, if you pass away and leave assets to your child, and your child later divorces, the inheritance could be in jeopardy. This is because under Hawaii divorce law, the inheritance itself is your child’s separate property and not subject to division, but the appreciation on the inheritance is marital property which is required to be divided equally.
Therefore, if you pass away leaving a piece of real estate to your child worth $500,000, and ten years later, when that property is worth $1,000,000, your child gets divorced, your child is entitled to a $500,000 credit for his or her inheritance, but the $500,000 appreciation would be shared equally between the spouses. If your child does not have $250,000 in his or her other assets to give the divorcing spouse, he or she could be court-ordered to sell the real estate to pay off the spouse.
If this scenario concerns you, you should consider leaving your assets to your children in trust, rather than leaving them outright and unprotected.
