Keeping Bequests Out of In-Law’s Hands

Parents are often concerned about how their children will use their inheritances. It is common to worry about assets falling outside of the family. This often happens as a result of a child’s divorce after the death of their parents. For concerned parents, a traditional gift in a will can likely to fall short of your estate planning needs. Protecting your child’s inheritance from being split with their ex-spouse presents a challenge for will writers. In this blog, we’ll discuss ways parents can ensure their child keeps their inheritance and uses it appropriately.

A Traditional Gift to a Child

The most straightforward way to give a gift in a will is to simply name a beneficiary for an asset. After the will writer passes away, the beneficiary will own the asset, and can do whatever they wish with it. For example, if the asset was a house, they could create joint tenancy ownership with their spouse, sell the home and use the proceeds to pay off their spouse’s debts. The original owner of the home has no assurance that the asset will stay in the family. An outright gift is not the best option for parents who are worried about a child’s inheritance leaving the family.

Often, parents trust that their child will keep the asset in the family. However, the asset or its value might leave the family even if the child doesn’t intend for it. If the child passes away shortly after their parents, the inheritance would pass through their estate to another beneficiary. The child didn’t do anything against their parents’ wishes, but the outcome was still undesirable from the parent’s perspective. For these reasons, giving an asset outright to a child is usually not a good idea if you wish to ensure that the asset stays in the family.

Trusts for Assets, Trusts for Funds

By creating a trust, parents can have much more control over an estate asset and its use. They can create specific terms for how and when the appointed beneficiary will receive the contents of the trust. For example, if a family cabin is held in trust, parents can specify the cabin is to be shared equally by their children. They can even specify time periods in which each child can use the property.

The parent could also create a purpose trust, where trust funds are only to be used for a specific purpose. For example, the parent could leave $10,000 to their child to be used for university tuition. Parents can create any rules or conditions they wish, and the beneficiary must comply in order to access the funds. The trustee for the account will ensure that these rules are followed while distributing the funds to the beneficiary. Having assets in a trust account will keep them in the family, assuming conditions have been made to ensure this.

Reminders for Will Writers

Ultimately, parents are able to ensure their estate and inheritances are kept in their family by using a detailed and tailored estate plan. While many might trust their children to follow their wishes, sometimes it’s out of the beneficiary’s control and inheritances can end up being used in ways you would not wish for, or even imagine. It’s always best to be prepared for any unusual circumstance and trust accounts can be the best method available to do so. By using trust accounts in a will, conditions that ensure assets remain in the family and are used as intended can be created.

If you require assistance creating your estate plan, contact an experienced BC estate lawyer today. We will ensure your estate is handled exactly as you’re expecting, ensuring that your inheritance is kept in the family under all circumstances.

Have a question about this topic or a different legal topic? Contact us for a free consultation. Reach us via phone at 250-888-0002, or via email at info@leaguelaw.com.