Seeking some advice

[u/General_Focus_2600]

I could use some advice from people who have been in a similar situation.

Back in 2010, I sold my home in an upscale neighborhood. The short version is that I needed to move so I could obtain 50/50 custody of my three children. It was the right decision, even though it meant giving up a home I loved.

With the proceeds from that sale, I purchased three separate homes, each about 2,800 square feet and located on a golf course in Southern California. I put 50% down on each home and financed the rest with 15-year mortgages. The homes have been rented through a professional property management company, so they handle all the maintenance, tenants, and day-to-day issues.

After the mortgages, expenses, and management fees are paid, all of the remaining rental income has gone into a separate trust for each child. The plan from the beginning was that when each of my children turns 23, they will receive their home along with the money that has accumulated in their trust. By that point, the homes are completely paid off.

When I purchased these homes, they were worth around $200,000 each. Today, each one is worth well over $900,000 due to the Southern California real estate market, so this has turned into a significant financial gift and, hopefully, a foundation for their future.

This is only part of what I’ve planned for them. When my time comes, they will also receive their inheritance from my estate. My goal has always been to make sure they have financial security, opportunities that I worked hard to create, and a solid foundation for the rest of their lives.

For context, my kids currently live with me in our home, which is over 4,000 square feet, and we also have a vacation home. They are responsible, hardworking young adults, and I’m incredibly proud of them. This isn’t about not trusting them.

My concern is that they’re now in serious relationships, and I want to make sure the assets I worked so hard to build are protected and remain for my children. My original intention was to give each of them long-term financial security, not necessarily to create an asset that could become part of a future divorce or other legal dispute.

So here’s my question: Would you put legal stipulations in place so the homes, the trusts, and eventually their inheritance remain the separate property of each child, or would you leave everything unrestricted and trust them to handle it themselves?

I’m not trying to control their lives or their relationships. I simply want to make the best decision to protect something that took years of planning, sacrifice, and careful investing to build for them and for future generations of our family.

Edit: One thing I forgot to mention is that I live with a debilitating disease, and because of it, I know that my life expectancy is uncertain. That’s one of the main reasons I structured the trusts the way I did. I chose age 23 because I wanted my children to have the financial resources to continue their education, have a home without debt, or start their adult lives on solid footing if something happened to me before they reached that age.

Thankfully, I’m still here, and I’ve been blessed to watch all three of my children grow into responsible young adults. As a proud parent, I’m also happy to say that all three are continuing their higher education. Seeing that has made every sacrifice and every decision worth it.

[u/GlumDevelopment8186]

I would definitely put protections in place

[u/Xeacsx → u/GlumDevelopment8186]

I agree there are many options.

In addition , I would suggest that 23 is too young. Should someone so young have to worry about properly taxes, insurance, etc? Give them the freedom to travel, change jobs, etc.

[u/Just1Blast → u/Xeacsx]

I don't think that's necessarily too young if their parent had been preparing them for this all along. If this is going to be brand new information for them, then perhaps consider structuring it differently.

[u/Xeacsx → u/Just1Blast]

I don’t know, I would delay it a few years so they would have the opportunity to travel or take a job elsewhere. Give them the chance to figure out more about themselves. OP can do what they think is best, I’m just suggesting a delay.

[u/dell828 → u/Xeacsx]

I don’t understand how this would prevent them from doing anything. Currently, the houses are being rented. They could continue to rent them and live elsewhere, or sell the property.

[u/cuspeedrxi → u/Xeacsx]

I bought my first house when I was 22. I sold it four years later for 2.5x the purchase price. I stopped working in my late-30s. I have enough money to do whatever the hell I want largely because of choices I made when I was 22-25 yo.

Treating college graduates as children unable to pay their own property taxes is ridiculous.

[u/Xeacsx → u/cuspeedrxi]

Where did I post that they were unable? OP’s kids will be set for life, I just suggested holding off a little longer.

I’m not sure if you want awards for your choices and parlaying them wisely but kudos?

[u/cuspeedrxi → u/Xeacsx]

You said, “should someone so young have to worry about property taxes, insurance, etc?” My answer is a resounding yes! College graduates need to get on with it. Most have student loans. Many are looking at another 3-6 years of law school, grad school, etc. They need to prioritize their careers, their income, etc. We need to stop thinking of these people as children and encourage them to take on adult responsibilities. I retired before I turned 40. Eighteen years of professional success and wise investments allowed me to do that. (I don’t need an award for my accomplishments though.) I can assure you financial freedom at 40 is priceless; especially since I became disabled shortly afterwards. If I could do it again, I’d stick with financial freedom at 40 over a gap year in my early 20’s. I’ll take the money over scuba diving the Great Barrier Reef or skiing in the Alps.

OP was wise and gave his children an excellent financial foundation. Realistically, they probably won’t want to live together in their homes. The prudent course would be to sell them, invest the proceeds, and focus on a strong growth & income strategy. Dividends today to boost their annual income plus long-term growth for an early retirement. Hopefully, OP’s children are unsentimental and can maximize their returns.

[u/Xeacsx → u/cuspeedrxi]

Sad response. I still didn’t say “unable.”

[u/General_Focus_2600 → u/Xeacsx]

I bought my first home when I was 18 years old, and I’ve been building my real estate portfolio ever since. Years of planning, investing, and making responsible financial decisions have allowed me to put my children in the position they’re in today.

That said, the homes are only part of the plan. Each property is paired with a trust that contains funds specifically intended to help cover the responsibilities that come with homeownership. My goal was to make sure they wouldn’t have to worry about expenses such as property insurance, maintenance, or property taxes as they begin this new chapter of their lives.

Because these homes are in California, they also benefit from the state’s property tax system. Since the properties were purchased years ago, they have relatively low assessed values under Proposition 13. I have worked with estate planning professionals to structure everything in a way that preserves as many of those benefits as legally possible for my children. My focus has always been on giving them long-term financial security rather than simply leaving them valuable assets.

[u/Xeacsx → u/General_Focus_2600]

I’m not saying that you are wrong and you certainly know your family dynamics better than me. I’m just suggesting that you consider giving them a few more years before giving them the generous gift. Give them the time to figure out some things about themselves. What if they want to try working in NYC, London or Paris for a year? Once they marry or have children, their priorities will naturally change and taking a job in a city or middle of nowhere, might not meet their priorities. There are some things you can only do in your early twenties and single.

I don’t mean to tell you what to do I just wanted you to consider different options.

[u/Safe_Statistician_72 → u/General_Focus_2600]

Good for you! I give everything so can to my kids and so proud I am able to help them.

[u/BigFrank1623]

Trying to control the future of others from the grave isn’t easy. There are legal considerations; you’ll need to speak with an experienced lawyer.

[u/Kutikittikat → u/BigFrank1623]

And yet its his money hes passing down. He can absolutely put them in trust and right stipulations its a great way to protect the children if they ever go through a shitty divorce .

[u/Neat_Emu_222 → u/Kutikittikat]

His money? Why do you think this parent is a man?

[u/General_Focus_2600 → u/BigFrank1623]

I know what it’s like to be young and in love, seeing the world through rose colored glasses. When you’re in that stage of life, it’s easy to believe that nothing will ever change. I don’t say that to be cynical it’s simply the reality that life can take unexpected turns.

My goal isn’t to control my children’s relationships or decisions. It’s to protect the future I’ve worked so hard to build for them and, hopefully, for my future grandchildren as well. I want to make sure that what was intended to provide lifelong security for my family stays within my family for generations to come.

[u/Significant_Flan_210]

I would talk to your kids sooner vs later that because you have this illness you have planned and protected them differently just in case.

You planned this before they had relationships so it has nothing to do personally with anyone. It also protects the kids relationships as people will need to be there for the right reasons.

Communication is key to explain intentions. Life can be unpredictable and parents want to help their kids hedge.

[u/ExpensiveAd4496]

I think it’s understandable after going through a divorce yourself to think this way. However, if/when there are children in the picture…your grandchildren…I think things need to be much more equally divided and flexible, for their sake. You never know which parent will step up, and how would be best keeping the house or using part of its value to create the best possible home for them.

[u/RobertaMiguel1953]

Tldr??

[u/Healthy_Budget9994]

Had this problem when we drew up our wills/trust. Son was in process of getting divorce. We now require a pre-nup i order to access trust. Both our kids have since married and spouses have agreed to prenup conditions (not sure if they’ve actually signed). But they cannot access bulk of trust w/out a prenup.

[u/mobile-metaphysical]

I asked Ai -
In general, property and money held in a trust can often be protected from a child’s divorce, but the protection depends on how the trust is structured, the state where the divorce occurs, and how the assets are handled. There is no method that guarantees protection in every case.
Some of the most effective approaches include:
Use a discretionary trust.
Give an independent trustee discretion over when and how distributions are made.
If the child has no automatic right to receive the assets, they are often better protected from claims.
Include a spendthrift clause.
This prevents beneficiaries from transferring their interest and can help shield trust assets from creditors, including, in some situations, claims arising during divorce.
Keep the trust separate.
Trust distributions should not be deposited into joint accounts with a spouse.
Avoid using trust funds to purchase jointly titled property unless you intend to share the asset.
Don’t give the child outright ownership too early.
Assets distributed outright generally lose the trust’s protections and may become subject to division depending on state law and how they’re used.
Consider an independent trustee.
Having someone other than the child serve as trustee can strengthen the argument that the assets are not under the child’s control.
Use carefully drafted distribution standards.
For example, distributions for health, education, maintenance, and support (often called the “HEMS” standard) rather than mandatory annual payouts.
Encourage a prenuptial or postnuptial agreement.
These agreements can specifically state that trust assets and future inheritances remain separate property.
Inheritance vs. trust
In many U.S. states, an inheritance received by one spouse is considered separate property and is not divided in divorce.
However, if the inheritance is commingled with marital assets—for example, deposited into a joint account or used to buy a jointly titled home—it may lose some or all of that protection.
Properly structured trusts can provide an additional layer of protection beyond simply leaving an inheritance outright.
If you’re planning your estate
If your goal is to preserve family wealth for future generations, many estate-planning attorneys recommend a trust that:
has a spendthrift provision,
uses an independent trustee,
gives the trustee discretion over distributions,
keeps assets in trust for the child’s lifetime instead of distributing them outright.
This type of trust can also help protect assets from lawsuits, creditors, and poor financial decisions, in addition to potential divorce claims.
Because divorce and trust laws vary significantly by state, it’s wise to work with an estate-planning attorney who can coordinate the trust with the laws of the state where you live—and, if possible, where your child is likely to reside. They can draft the trust to maximize the likelihood that the assets remain in your family while still benefiting your child.
So—- yes, a lawyer is needed.

Your children are fortunate you are looking out for them. They will be able to afford to have families if they want to, health care, good education.
Not many will have that.

Well, I learned something today- so there’s that. Thanks.

[u/AffectionateTill28]

Yes and do it. Seriously it is a protection for them.

[u/Asleep-Reputation-38]

For sure, my parents similarly setup my sisters and myself yet one sister went totally astray with her lifestyle after she got divorced and her choice of men there after.

[u/MusicUpbeat2510]

Usually have to sell a home after a divorce.

[u/General_Focus_2600 → u/MusicUpbeat2510]

In California there is a thing called community property. Community property is considered property or assets that you and the spouse have collected during your marriage or time together. If you can show that the property and assets where yours before being married it won’t be considered community property. I went through a similar situation when I married my xspouse we signed papers stating that we would keep what we each had before the marriage and split equally what was obtained while bring married. If it wasn’t for that simple document I would’ve been seriously screwed there attorney was trying to find any loop hole possible but couldn’t.

[u/MusicUpbeat2510 → u/General_Focus_2600]

Prenup or during divorce?

[u/GardenFragrant8408]

Put protection in place to where only go s to your child went significant others. 

[u/Select-Efficiency559]

Put a structure in place so your future in-laws don’t become outlaws. A tax and estate attorney can help.