Protecting inheritance from future son-in-law

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Q. My daughter is getting married and I don’t trust her husband. I’ve always given her annual gifts of cash and I don’t want him to be able to touch that money. Any ideas?
— Dad

A. We’re glad you’re looking out for your daughter, and it’s a shame that you’re not crazy about her husband.

You do have choices.

The simplest option would be for your daughter to establish an account which only she has access to and into which she put any money you give to her, said Yale Hauptman, an estate planning attorney with Hauptman and Hauptman in Livingston.

“As long as her future husband’s name is not on the account and she has not given him power of attorney over that account, he cannot access the funds,” Hauptman said.

If your concern is that your daughter may not be able to resist efforts by your future son-in-law to gain access to the funds, you will need to take additional steps.

For example, he said, if she uses the money to pay monthly bills, you could pay the bills directly instead of giving her money.

“Once she has children, if she is setting aside the money for her children’s college you could set up a 529 account for your grandchildren, making yourself the custodian,” Hauptman said.

If you are giving her the funds and she is simply holding them and not spending the gifted money, a trust may be an alternative — but that’s where it can get complicated.

The more restrictive you make the trust in order to protect those assets from your son-in-law, the more tax issues such as gift and estate taxes become a concern, Hauptman said.

“Not knowing the size of your estate or what may happen with respect to estate taxes until the tax reform efforts in Congress play out, it is hard to say what type of trust would be appropriate,” Hauptman said. “In light of all that, setting up a trust may be the least desirable option.”

If you have given her substantial amounts of money already and as a result she is going into the marriage with more assets then he, Hauptman suggests your daughter consult with a matrimonial attorney. She could look into drafting a prenuptial agreement so that if the marriage fails, she is assured of not having to split any of the funds with him in a divorce.

“Finally, I would also suggest that you consider updating your estate plan so that anything you intend to leave her when you pass away should instead be left to a trust for her benefit,” Hauptman said. “There are not the same gift tax issues that exist when transferring to a trust while you are still living.”

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This post was first published in November 2017. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.