While there is no requirement that you leave any amount of assets for your adult children to inherit, many individuals do wish to pass on their wealth to their adult children and grandchildren, if any.
Moreover, an adult child who is married is likely to share any inheritance with his or her spouse, and then combine the inheritance with other marital assets to use for various purposes. However, if you fear that your child might divorce in the future, or if you are not a fan of your daughter-in-law or son-in-law in general, then you may want to structure your estate planning so as to prevent your child’s spouse from laying claim to your child’s inheritance.
When Your Spouse’s Child Becomes an Indirect Beneficiary of Your Inheritance
One of the dangers of leaving an inheritance to a married adult child is that the child’s spouse will indirectly claim entitlement to the inheritance, one way or another. For instance, suppose your adult child passes away prematurely, which will often result in leaving your son-in-law or daughter-in-law in sole possession of any assets that belonged to your child. In this case, your child’s spouse may use the funds as he or she sees fit, which may frustrate the intent of your inheritance, particularly if you wanted the funds to go to your grandchildren.
Another problem might occur if you leave an inheritance to your child, who then, predictability, uses the assets, along with existing marital assets, to purchase a home or establish an investment account to benefit. Inevitably, this commingling of marital assets with the inheritance will indirectly benefit your child’s spouse. If the parties later divorce, however, the danger is that a divorce judge will determine that the inheritance proceeds are marital property for division between the spouses in the divorce.
Establishing a Trust
One of the best ways to leave an inheritance for your adult child, while still preventing his or her spouse from indirectly benefitting from the inheritance, is to establish a trust. For example, you could establish a lifetime trust that allows your child to access the principal for certain purposes, such as for health expenses or education. In the event of your child’s death or divorce, the assets will then belong to the trust and not to your child’s spouse. Upon your death, the trust’s beneficiary—your adult child—will become the trustee of the trust, which allows him or her to maintain control over the funds without actually owning them, thus continuing to avoid the death or divorce problem.
Contact Your Illinois Trust and Estate Attorneys Today
At Momkus LLC, we pride ourselves on helping our clients create comprehensive estate plans that are designed to effectuate all of your intentions. Unfortunately, life is full of unexpected twists and turns, so you need to be prepared. Call our office today at 630-434-0400 and set up a consultation with one of our compassionate DuPage County estate planning attorneys. Learn how we can assist you in achieving all of your estate planning goals.