When considering estate planning, most often children are the primary beneficiaries of the estate. Estates are often evenly split between all adult children. Often for the person making the will, the testator, this distribution seems like the perfect way to distribute their assets. Many testators fail to consider what could happen to the money after it is transferred to the children. Once the inherited funds are transferred to the adult children, those funds become that child’s personal assets, and can be distributed according to the desires of that child.
Inheritance left to children can end up in the hands of a son-in-law or daughter-in-law in two ways, through inheritance or in a divorce. Once the adult children receive the money, it becomes their assets and can be left to whomever the children wish. If the children leave the money to their spouses, the money is now being distributed to someone that is not a blood relative. This is of particular concern when the adult children marry into a blended family. In this scenario, the testator’s money can end up going to their son-in-law, and then going to children from the son-in-laws first marriage, rather than to the Testator’s grandchildren. This is almost never the desire of the testator. The other way assets can end up in the hands of in-laws is through a divorce. If the adult children receive the inheritance and then get a divorce, the assets may be subject to division with their spouse in divorce depending on whether the adult child comingled their assets with their spouse’s assets.
The risk of leaving inheritance to in-laws can be avoided by funding the money into a trust. The trust can be set up to provide support for the adult children and on the death of the adult child, the asset will be distributed to a person or entity specified by the Testator. This prevents the adult child from leaving money to a spouse or another person not favored by the Testator. When assets are left in trust for an adult children, the chances of such assets being divided in divorce is greatly reduced.
Drafting a trust that provides protection of money beyond the Testator’s death required advanced estate planning techniques. The desire to provide for the expenses of adult children need to be balanced by provisions protecting the property. To ensure proper protection, it is advisable to hire an experienced estate planning attorney to draft the planning.