How do I protect my daughter’s inheritance from her husband? I know they aren’t happy, and I think they will get divorced soon.
This is a common concern for a lot of my clients — how to protect their adult children from losing their inheritance. The answer is both simple and complicated, because there is the letter of the law, and then there’s what actually happens in reality.
First, inheritances are not community property, even if received during a marriage. I’ve talked about community property before, but here’s a recap: Community property is all of the assets and liabilities acquired during a marriage. Separate property is all of the assets and liabilities acquired before a marriage, or received as a gift or inheritance during a marriage. Separate property can become community property if it is comingled with community property.
So the simple answer is that a bequest to your daughter (and not your son-in-law) is a gift of separate property to your daughter. It’s hers, and your son-in-law can’t touch it…
Unless it gets comingled. This is the complicated part. In practice, most people who receive an inheritance don’t create a separate bank account that only holds their inheritance. If they use it to buy something (like the down payment on a house), they often aren’t careful to keep the new property separate from their community property (for example, but adding their spouse to the title of the house, or by using their wages to pay the mortgage each month). While it doesn’t happen immediately, comingling property like this will eventually lead to it becoming characterized as community property, and thus jointly owned by both spouses equally.
If you want to avoid this situation, I recommend creating an inheritor’s trust for your daughter. The trust ensures that she receives her inheritance (she can even be the trustee of the trust) and that the property in the trust remains separate. Usually the property is available to your daughter for the duration of her life, and then it passes to her children, to her adult siblings, or to your nearest living descendant. This ensures that her inheritance never becomes the property of the son-in-law (or his separate children, if that’s a concern).
If you would like to learn more about how to protect your children’s inheritance, schedule a consultation today.
