“I had a dream my daughter-in-law killed me for the money. She thinks I left them in the will.”
In her captivating song “Antihero,” Taylor Swift touches on a sentiment that’s more than just a catchy lyric. A scheming daughter-in-law waiting to get her hands on her husband’s inheritance is a tale as old as time. The fear isn’t just poetic; it’s grounded in real-life scenarios where inheritances are squandered, mismanaged, or end up in the hands of people outside the direct bloodline due to marital disputes or divorces.
The world of estate planning has long sought to address these concerns, most notably through the use of trusts. In this article, we look at the age-old concern of preserving wealth within the family bloodline and the modern solutions to tackle it.
Trusts: A Solution to the In-Law Problem
Trusts have become the go-to solution to address these concerns. They allow individuals to set aside assets for specific purposes, beneficiaries, and even under specific terms. Here’s how trusts can address the concerns raised in Swift’s lyrics:
Control Over Assets: With a trust, the grantor (or person setting up the trust) can dictate how the assets within the trust are used. For example, they could stipulate that funds are only to be used for education, health, or the general well-being of the beneficiaries. This prevents beneficiaries from squandering their inheritance on frivolous spending, including on significant others. It can also provide protection against a suitor who is primarily interested in the beneficiary’s current or future inheritance.
Protection from Marital Disputes: Assets left to a beneficiary within a trust are generally shielded from divorce claims. If a beneficiary were to divorce, the trust assets would typically not be considered part of the marital assets to be divided. For this reason, it is best to keep a trust intact, even when a beneficiary gets older.
Clients often insist on leaving assets directly to their adult children under the misconception that setting up a trust suggests that they don’t trust their child to make smart decisions with the money. While protecting assets from imprudent spending by a beneficiary is one reason to leave a child’s inheritance to a trust, trusts are also commonly employed for the purpose of protecting the beneficiary’s inheritance from third parties, such as creditors or divorcing spouses. Contrary to being a burden on a beneficiary, a trust can provide a valuable benefit. And in the hands of the right estate planning attorney, a beneficiary can even become the trustee of their own trust, so they have the benefit of substantial control over the assets as well as asset protection.
When the adult child who is the primary beneficiary passes away, trusts can ensure that the remaining assets are preserved for the benefit of the grandchildren and don’t end up outside of the linear family.
Preserving the Family Legacy: While in Taylor Swift’s imaginary dystopian family, she disinherits everyone in favor of her cat, most parents are inclined to want to preserve assets for their children and perhaps future generations. Trusts can ensure that the family wealth continues to benefit descendants long into the future, regardless of marital ties or other circumstances.
Very few daughters- and sons-in-law fit the profile of a greedy spouse looking to profit from their spouse’s parents. Nonetheless, life is unpredictable and divorce is common. A trust is a great way to satisfy a parental instinct to protect children and ensure their financial wellbeing, regardless of their age or marital status.
At the Village Law Firm, we help clients protect their assets for future generations. To find out how we can help you protect your family’s future, contact us.