You are not alone, Jessica. Truly. We received your question, “My husband and I are not big fans of our son-in-law and are concerned that he’ll end up walking away with our daughter’s inheritance. What should we do?”
Many parents, including me, have this same concern and so I’ll tell you exactly how to keep your hard-earned money from walking out the door in the pocket of your daughter’s divorcing spouse.
Warning: Outright Inheritances Can Be Seized in Divorce
If you give your daughter an inheritance outright (not in trust), she’ll likely put the assets in joint names with her husband – we lawyers call that “comingling assets” – and then the assets can be taken in a divorce.
What’s really cray cray is that your son-in-law could end up with all of your daughter’s inheritance, not just 50%. Really. And, even if they don’t get divorced, your son-in-law could blow the inheritance on something foolish or get sued and lose it.
Trust Protections Protect Inheritances
The solution is to give your daughter her inheritance in a trust (and not in her individual name) so that you have the opportunity to build in protections. Rest assured, she can use and enjoy the assets, but they can’t be taken from her in a divorce.
Estate planning attorneys build these protections into trusts all of the time. In fact, I have protective trust provisions set up for my three children.
4 Steps to Protecting Your Daughter’s Inheritance
We all have concerns about that in-law becoming an outlaw, but fortunately you can be the new sheriff in town and protect those assets with the flourish of a pen.
Step 1: Share your concerns with your estate planning attorney and ask to include protective trust provisions in your estate plan. Why? So that your estate plan actually reflects your wishes and protects your daughter and her inheritance.
Step 2: Keep your plan up-to-date as life unfolds. Don’t go more than 3 to 5 years without a professional review. Why? Because both life and the law change. Plus estate planning attorneys are always coming up with better ways to protect their clients.
Step 3: Keep your assets in alignment with your estate plan. I love trusts and if you have a trust, make sure it’s fully funded, meaning your assets are titled in the name of your trust. If you choose to put provisions for trust protection in a will, be sure the assets are held in individual name or made payable to your estate or your daughter’s estate. Get your estate planning attorney’s best advice on aligning assets.
Step 4: Chat with your daughter about your estate planning and the benefits of keeping the assets in the trust. Tell her not to pull assets out unless she needs them because one the assets come out of trust, they no longer are protected.
If you don’t want to mention the son-in-law during that discussion, you can simply tell her about all the other protections a trust provides. Gifts in trust can be protected from predators like scammers and creditors such as in a business failure, bankruptcy, medical crisis, slip-and-fall, car accident, tenant injury, and the like. And, in the alternative, let your estate planning attorney be the new sheriff in town and explain all the protections and benefits of keeping assets in trust to your daughter.
Because you won’t be concerned with him walking off with everything you’ve worked so hard for, updating your estate plan to include trust provisions for your daughter may improve your relationship with your son-in-law, or at least help you to sleep better at night. Sounds like a dang good investment.
Best Wishes, Wendy Witt : https://amillionfamilies.org