(Dow Jones) When a child grows up, falls in love and marries, his or her parents may not share the warm feelings-or want to share their wealth.
Prenuptial agreements are one way to draw a legal bloodline around a family estate and keep an in-law out. While these pacts are on the rise, however, elders often decide not to suggest them to a soon-to-be-married son or daughter for fear of hurt feelings.
"It's not that easy to broach that subject to a couple in love," says David Pratt, managing partner of the personal planning department of the Boca Raton, Fla., office of law firm Proskauer Rose.
Creating a trust is a popular option for keeping assets where parents want them to be in years to come, Pratt says. Besides keeping them in the child's hands if there's a divorce, a trust protects assets from creditors and can keep them in the bloodline for the extended future.
Various kinds of trusts can be used, and don't have to be particularly complicated.
An irrevocable trust set up for the benefit of the child is quite common. Problems can arise, though, if marital funds are used to support the trust in any way. In such cases, the trust itself becomes marital property, compromising the goal. A brick wall needs to keep the spouse from helping to pay insurance or taxes on the trust, for example.
Another option is a preservation trust, which can shield assets from a prospective spouse. Parents may convince a daughter who is about to be married to put, say, a house or investments she already owns into the trust and name a beneficiary other than her groom-to-be. The prospective spouse doesn't have to be consulted, and may not learn about it until much later, if at all.
Conflict sometimes erupts between parent and child when there is talk of a prenup. These agreements are a contract between child and prospective spouse, so parents can't exert legal pressure. They often try other means of persuasion, though, threatening to stop making gifts to the child or otherwise cut off funds, for example.
Marlene Eskind Moses, a matrimonial lawyer at Moses & Townsend and president of the American Academy of Matrimonial Lawyers, says pressure comes in various shapes, from "emotional leverage to financial leverage."
While divorce clients often ask her about prenuptial agreements, financial advisers also get in touch with her to make sure their estate plans are divorce-proof, according to Moses.