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Law Office of Robert Mansour

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(661) 414-7100

Protecting your kids from sons-in-law and daughters-in-law

5/24/2014

 
I recently had a client asked me how she could protect her son's inheritance from her daughter-in-law.  Needless to say, this client did not have a good relationship with her daughter-in-law and suspected that the only reason the daughter-in-law married her son was because of the expected inheritance.

I explained to her that if we design her estate plan well enough, her daughter-in-law would not have to have any access to her son's inheritance.   We could design the trust to distribute portions of the inheritance upon completion of certain events (like getting a college degree or attaining a certain age).  The key is to NOT allow for automatic inheritance by the son.

If her son inherits automatically upon her death, there is nothing we can really do to stop him from sharing his inheritance with his wife.  After all, he could take all the money and simply give it to his wife.  This is the United States - people are free to act as they wish - and there is only such much you can do "from the grave."  He would probably do what most people do when they inherit - they take the inheritance and put it in a common joint account with their spouse.  As such, nothing could stop the daughter-in-law from getting at the money. 

If her son inherits the money, puts it in a common account for a few years, the daughter-in-law would probably attempt to claim half that money if they were to ever divorce!  Therefore, we designed a living trust that would protect the inheritance by keeping it in the trust and prevent distributions if there was any danger suspected by the trustee.  In other words, the distribution to the son would NOT be automatic - it would depend entirely on the trustee's complete discretion.  If the son is not "in control" of the inheritance, and the decision rests with someone else, there is a strong argument that the inheritance hasn't "vested" and is still sitting in the living trust.

The ultimate question is whether or not the inheritance automatically "vests" in the son upon my client's death.   If the trust simply says, "After I die, my son gets my estate" then there really is no safeguard, no layer of protection between the son and the money.  If the trustee can indefinitely hold the inheritance in the trust, the son would have a very strong argument that the money is not vested.  As such, the daughter-in-law would have a much harder time getting to that money. 

There are many ways that we can design a living trust to protect kids from unscrupulous daughters-in-law or sons-in-law.  These solutions aren't always perfect, but they may be better than handing a child his/her inheritance outright.  Feel free to contact my office if you like more information about this subject. Call (661) 414-7100 to arrange for a consultation.  Hopefully we can design an estate plan that addresses your concerns.

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​Law Office of Robert M. Mansour | 28212 Kelly Johnson Pkwy #110, Santa Clarita, CA 91355 | www.MansourLaw.com | (661) 414-7100 
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