Over-controlling daughter-in-law? Lazy son-in-law? These are just two reasons why parents may want to keep a daughter-in-law or son-in-law out of their estate.
Other common reasons include: (i) the fact that the in-law spends too much money; (ii) the in-law has their own kids; (iii) the in-law will inherit from their own parents and grandparents; (iv) some parents want to keep everything in the “bloodlines” because they inherited from parents and grandparents; others just don’t like their in-laws; and (v) others fear that their children will get divorced in the future and lose their inheritance.
These concerns are real. And parents have several options to address these concerns in an estate planning program. Part of the reason we strongly recommend clients seek out an attorney focused on estate planning and elder law is because they will have the knowledge to help you tailor a plan to your needs and concerns.
One option is simply leave the inheritance to the child – outright. Some parents reason that an inheritance is the separate property of the child so that should take care of it. However, inheritances that children receive are often, either intentionally or unintentionally, commingled to the extent that it loses its separate property status.
A second option parents have is to leave their child’s inheritance to a trust for the benefit of the child. If the parents name the child as the trustee, the child’s spouse could exert influence over the child and force the child to take excessive distributions from the trust. But some parents tell me, “Let’s leave it to a trust for our child and name our child as the trustee. If our child screws it up, so be it. We did what we could do to try to protect him without taking away his access to his inheritance.”
A third option is to leave your child’s inheritance to a trust, but name a 3rd party as the trustee of the trust – in essence restricting your child’s access to his or her inheritance. By restricting your child’s access to the trust, you are restricting your child’s spouse from influencing your child to access the trust. You may even wish to name your child’s children as the principal beneficiaries of the trust so that when your child later passes away, remaining trust assets would stay in the bloodlines benefiting your grandchildren. Your child’s withdrawal or distribution rights become key components to this program.
There are many factors that play into how you leave an inheritance to your children. An expert can help you choose the best option for you and your family.
Mark McMullin
Missouri Estate Planning Attorney
www.CapeGirardeauLaw.com
Phone: 573-334-5125