Estate Planning with In-Laws on Your Mind

One of the most common questions I receive during the estate planning process is whether a child’s spouse will be able to “get their hands on” their inheritance. Most people want to leave their wealth to their own children, and not their in-laws. Clients often express concerns about spendthrift in-laws or rocky marriages.

Spouses don’t have a legal right to inherit from their in-laws. However, spouses can and do typically inherit from their own husbands or wives. When a couple divorces, inherited property is considered “separate property” that is not subject to division by the courts as marital property. However, an inheritance can lose its status as separate property if it is co-mingled with the spouse’s property or invested in a marital asset such as a home.

So, as I often explain to clients, once your child receives an inheritance outright and free of trust, it is their money to do with as they wish. They can choose to give all or part of it to their spouse, or they can convert it to marital property by investing it in jointly owned accounts or real estate. Marital property may be distributed to an in-law as part of a divorce. In the absence of a marital agreement or a trust, a surviving spouse is entitled to make a claim against their deceased spouse’s estate, even if they were intentionally disinherited under a will.

To ensure that only your intended heirs receive the benefit of inherited wealth, the property should be held in a trust for the intended beneficiary. A properly designed trust can ensure that your family’s wealth is only distributed to your intended beneficiaries. In many cases, the estate planning client has no problem with their beloved daughter or son-in-law inheriting from their spouse. However, for those situations where there are concerns about how the in-law will manage the money or the stability of the marriage, it’s best to discuss your options with an experienced estate planning attorney.

By Louise Paglen

Estate Planning, Elder Law, and Special Needs Attorney