CAN I PREVENT A DAUGHTER-IN-LAW OR SON-IN-LAW FROM BENEFITTING FROM MY CHILD’S INHERITANCE IF THEY GET A DIVORCE?

Maybe the second or third most frequent question I’m asked is how do I prevent an in-law child from benefiting from my child’s inheritance if my child’s marriage fails.

You have to remember that if a trust or estate plan gives everything outright to a child, it’s now in their possession and it’s up to them to protect it as sole and separate property to keep it outside of a divorce.

The best way to protect that is to never really give it to them. Instead, keep it in trust for them, allowing them access to the income, allowing them limited access to the principal for important and prescribed events, especially life events in their life to make sure the in-law child, the in-law’s child’s spouse, will not be able to make a claim in any marital dissolution proceeding.

Note: The Tax Cut and Jobs Act of 2017 signed into law in December 2017 increased the exemption amounts mentioned in these videos. The personal estate, gift, and generation-skipping tax lifetime exemption was increased to $11.18 million per person. The annual gift tax exclusion was increased to $15,000 per donee per year.

Both amounts are indexed for inflation and may increase year over year until December 31, 2025, when the law sunsets and reverts to 2017 values