Typically, my clients do not want to include their in-laws in their estate plan. Every once in a while, however, I have a client who really wants to include an in-law as a beneficiary of his or her estate. As a general rule, I think that including an in-law in your estate plan is a bad idea.
No one wants to think about a divorce in the family, but, realistically, there is no guarantee that your son or daughter will remain married to his or her spouse. Imagine, you leave your daughter-in-law a portion of your estate in the event your son predeceases you. You reason that since she is the mother of your grandchildren, she will use the inheritance to provide for the children. However, she may remarry and have more children (or step children) and she would be free to leave “your” money to those children who are not related to you and/or exclude your own grandchildren from the money. Most people feel some concern about the possibility that their bloodline will be excluded from inheriting their money.
Potentially worse than a child who predeceases you, is a situation in which your Will names your son-in-law as an heir but by the time your daughter and her husband inherit your money, they are divorced. In my own practice, I represented a woman whose father had given her a substantial amount of money in an informal trust to protect it from the cost of long term care. The woman and her husband went through a divorce and the husband, needless to say, had no respect for an informal understanding between his wife and her father about a large sum of money. He walked away with half of the father’s money.
By far the most precarious situation involves the family house. In the early 90’s, there was a case that was much talked about. A woman had given her house jointly to her son and daughter-in-law without retaining any right to live in the house. Her son died and his Will left everything to his wife, the woman’s daughter-in-law. The daughter-in-law, however, did not have the same commitment to her mother-in-law that her husband had to his mother. The daughter-in-law eventually remarried and wanted to sell the house. She did not actually evict her former mother-in-law, but she made her mother-in-law’s life so unbearable, the poor woman felt compelled to move out. The woman sued her daughter-in-law but lost. The court held that she was perfectly competent when she deeded her house to her son and daughter-in-law and she was represented by a lawyer at the time and therefore she had no right to her house because there had been no fraud at the time of the deed.
I also have a client who lives in a house owned by her daughter. The living arrangement has existed since long before I became involved. I have strongly suggested that the daughter make some arrangements to protect her mother in the event the daughter passes away or becomes incapacitated. My client, the mother, is reluctant to pressure her daughter and I can understand that, but it leaves my client very vulnerable.
More recently, I met with clients who co-own a home with their son and daughter-in-law. When the son and daughter-in-law got divorced, the daughter-in-law’s small ownership interest in the house was enough for her to play havoc with my client’s estate plan during the divorce process. The parents will be forced to buy her out for the full value of her share.
What can you do to prevent such an occurrence?
- Do not name your in-laws to inherit any part of your estate, nor make them a co-owner of any asset. Especially do not give your home outright to your child without retaining some formal, written right to live in the house for your lifetime in the event your child predeceases you.
- If you really want to include an in-law in your estate plan as a beneficiary, include a clause that states that the son or daughter-in-law must be married to your child at the time of the receipt of the inheritance (or at the time of your child’s death, whichever is earlier). Doing so will minimize the possibility that you will be leaving money to a person who is not married to your child at the time of your death.
- If you have already given your home to your children, try to correct the situation by obtaining a deeded life estate from your children. If that is not is not possible, ask your child to put a clause in the child’s own Will allowing you the right to continue living in the home even after your child’s death. You may wish to have a written lease or a separate Trust.
- Finally, instead of an outright bequest, consider a so-called “Dynasty Trust” which holds your family wealth in a Trust for the long term. Include a provision which would allow a surviving in-law to have some access to the Trust via a trustee with authority to make distributions to the in-law in certain situations. These types of Trusts not only keep your money in the family, but also serve to protect your wealth from children who have creditors, gambling or substance abuse problems, as well as greedy spouses.
Margaret Hoag is an attorney with Eckel, Morgan & O’Connor, LLC in Acton, Massachusetts. She concentrates her practice in the area of elder law, including long-term care planning, guardianship and conservatorship, MassHealth (Medicaid) application, estate planning, and probate administration.