As future spouses contemplate a possible divorce when they enter into a prenuptial agreement, parents of future spouses (which can be any parent) should contemplate their child’s potential divorce when establishing a trust for the child’s benefit. Parents with a child who is facing a divorce often ask what they can do to protect the child’s inheritance from the child’s soon-to-be ex-spouse. The best protection that a parent can provide takes place before there is a potential divorce, and even before there is a marriage. As a general rule, Sections 3501(a)(3) and 3501(a) of the Pennsylvania Divorce Code provide that any property that the child (or any married party) acquires by gift, bequest, devise or descent, or property acquired in exchange for such property, is considered to be nonmarital property and not subject to the rules of equitable distribution. However, the increase in the value of any nonmarital property is considered to be marital property.

For example, if a parent leaves $500,000 to the child outright through his or her estate, and, during the marriage, prior to separation, the $500,000 appreciates to $750,000, the child’s $500,000 inheritance would not be treated as marital property. However, the $250,000 of appreciation on the inheritance and any income from the inheritance could be included in the equitable distribution of marital property and a portion of the appreciation could be awarded to the child’s spouse as part of the divorce.

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