How do you plan to protect your child’s inheritance from a bad marriage?

[CardsFan]

Our DS is almost 38, and just proposed to his GF of several years. First marriage for both. She is a few years younger. Wedding is expected a year from now. We are 64, retired, with a significant nest egg.

In our case, no plans to control from the grave. He will inherit it all when we pass. How he deals with it is up to him. The only possible change to this would be, if they have kids, we might set up something for them, to at least take care of college. Could be 529's, or could just be a bequest in the will.

FWIW, we adore our future DIL, and have spent time with her folks and sister (and BF), as well. No one knows what the future holds. I prefer to keep a positive out look.

 

[Sunset]

In my state (and possibly others), inherited assets, as long as they are not commingled, are considered separate property and not subject to a divorce proceeding.

....

This is common in many places, but of course one should check, and tell the inheriting kid as they probably don't know.

I'm not worried about it, not going to try to control stuff when I'm dead, as I can't control it now

 

[nancyfrank232]

Here is what my grandfather's brother did when his daughter married and he did not think it would last. He had a chat with his lawyer. He had a very successful business. Hard working, very canny Scotsman. His daughter's fiance was in med school.

-he bought a house for them to live in. The title was in his name, not his daughter's or her husband's, or joint.
-he put his son in law on the payroll, intentionally NO income went his daughter
-he provided them with a company automobile. Nothing in either of their names.

Less than two years after med school the marriage was over. SIL kept no assets, no alimony from his wife. NADA.

Not good, but it could have been much worse had he not been on the ball and sought some legal advice.

+ 1

Smart man
Why did he put SIL on payroll?
If positive outlooks worked we wouldn’t have Wills, Pre-nups or Trusts

 

[Senator]

A prenup would be best. Or just don't get married. Marriage is an obsolete concept anyway and the lifetime cost is astronomical.

Independent people don't fall for the trick.

 

[candrew]

Or just don't get married. Marriage is an obsolete concept anyway and the lifetime cost is astronomical.

Independent people don't fall for the trick.

That's an interesting opinion though a 2018 CDC National Health statistical report seems to disagree.

https://www.cdc.gov/nchs/data/nhsr/nhsr111.pdf

From the report:

47.9% of cohabiting women had household incomes less than 150% of the federal poverty line, compared to 25.6% of married women

36.1% of cohabiting men had incomes less than 150% of the federal poverty line, compared to 21.2% of married men

25.2% of cohabiting women had incomes over 300% of the federal poverty line, compared to 48.1% of marrieds

32.4% of cohabiting men had incomes over 300% of the federal poverty line, compared to 52.4% of marrieds

This is one of the more striking examples of the fact that a lot of cohabiting women and men tend to be poor compared to married women and men. The data on education follows in similar fashion. Married people had the most education followed by those who were not married or cohabiting, with cohabiting people reporting lower levels of education than the other two groups:

25.3% of cohabiting women had a bachelor’s degree, compared to 43% of married women

16.2% of cohabiting men had a bachelor’s degree, compared to 36.5% of married men

 

[Bestwifeever]

So much to think about if we want to worry:

A. One of the parents will pass away before the other, more than likely--are the assets protected from a second marriage should that happen? DH will inherit my estate; perhaps he will remarry, rewrite his will to make her the beneficiary, who may then outlive him and then leave everything to her family, shutting out our own kids.

B. Sadly, an adult child may pass away before the parents. Is the parents' will written to have the grandchildren inherit their parent (the deceased adult child) share, or would it go to the surviving spouse of the deceased adult child? The surviving spouse of the deceased adult child is likely to remarry and may have more children. Now what?

We have TODs and beneficiaries and a simple will, half to each child or their surviving children. They're on their own to protect themselves.

 

[Senator]

That's an interesting opinion though a 2018 CDC National Health statistical report seems to disagree.

https://www.cdc.gov/nchs/data/nhsr/nhsr111.pdf

From the report:

47.9% of cohabiting women had household incomes less than 150% of the federal poverty line, compared to 25.6% of married women

36.1% of cohabiting men had incomes less than 150% of the federal poverty line, compared to 21.2% of married men

25.2% of cohabiting women had incomes over 300% of the federal poverty line, compared to 48.1% of marrieds

32.4% of cohabiting men had incomes over 300% of the federal poverty line, compared to 52.4% of marrieds

This is one of the more striking examples of the fact that a lot of cohabiting women and men tend to be poor compared to married women and men. The data on education follows in similar fashion. Married people had the most education followed by those who were not married or cohabiting, with cohabiting people reporting lower levels of education than the other two groups:

25.3% of cohabiting women had a bachelor’s degree, compared to 43% of married women

16.2% of cohabiting men had a bachelor’s degree, compared to 36.5% of married men

The moral of that data is this.

Once the financial benefit of a divorce is eliminated, marriage is no longer necessary.

 

[MichaelB]

The moral of that data is this.

Once the financial benefit of a divorce is eliminated, marriage is no longer necessary.

You’ve made your point, so why don’t you give it a rest.

 

[Gumby]

That's an interesting opinion though a 2018 CDC National Health statistical report seems to disagree.

https://www.cdc.gov/nchs/data/nhsr/nhsr111.pdf

From the report:

47.9% of cohabiting women had household incomes less than 150% of the federal poverty line, compared to 25.6% of married women

36.1% of cohabiting men had incomes less than 150% of the federal poverty line, compared to 21.2% of married men

25.2% of cohabiting women had incomes over 300% of the federal poverty line, compared to 48.1% of marrieds

32.4% of cohabiting men had incomes over 300% of the federal poverty line, compared to 52.4% of marrieds

This is one of the more striking examples of the fact that a lot of cohabiting women and men tend to be poor compared to married women and men. The data on education follows in similar fashion. Married people had the most education followed by those who were not married or cohabiting, with cohabiting people reporting lower levels of education than the other two groups:

25.3% of cohabiting women had a bachelor’s degree, compared to 43% of married women

16.2% of cohabiting men had a bachelor’s degree, compared to 36.5% of married men

Interesting data. I wonder which way the causation flows, if it does at all. Does poverty and lower education level lead to less marriage or does marriage lead to higher income and higher educational achievement? Or is it just simple correlation without any causation?

 

[OldShooter]

... This is one of the more striking examples of the fact that a lot of cohabiting women and men tend to be poor compared to married women and men. ...

Well ... actually the data says nothing of the sort. It says they tend to be low income, from which one might as logically conclude that they are young. The discrepancy in college degrees might be due to the fact that they are often still in school.

I have no idea what the right answer is and not much interested anyway, but I do get annoyed once in a while by sloppy science.

 

[kaneohe]

a reply from the other end (receiving)...........when my parents passed away and the kids were inheriting, it was a pleasant surprise to find out that the giving was not to the kids but to the kids and their spouses jointly......... as if to say that the spouses had been fully accepted into the family.

Time will tell if we're made of the same stuff............

 

[athena53]

I'm not concerned about DS and DDIL. They're very religious and their marriage vows included, "I will never divorce you". More importantly, 5 years and 3 kids later, they seem on solid footing and they're a good team. They're both LBYM types and if they did divorce, I'd want DS to take good care of them all since DDIL is a SAHM.

I do have a revocable trust but it's mostly because neither of them is avidly interested in managing money and my brother the CPA (who will be a co-Trustee) is. I also want to protect against a couple of unlikely but scary events: DS predeceases DDIL and she remarries, and DS and DDIL both predecease me and their friends named in their will take care of the kids. In both cases I want someone from my family watching the money.

 

[Senator]

Avoiding co-mingling of inheritance funds goes a long ways towards keeping the liquid assets in the hands of the one that receives them. Keep them separate, forever.

Keep the inheritance funds in a separate account, with only one signature able to access them. In your will, only list the person you want to receive them. List the other as $1 to acknowledge that you didn't want them to get anything.

If you go (die) before your spouse, and they have kids outside your marriage, you may very well lose out on any passing on wealth to your blood relatives. A co-signer or beneficiary overrides a will. A primary residence will very likely go to the spouse, as most couples list the title that way.

Despite all the assurances of a marriage staying together, statistics say many won't last forever. The over 50 age group is very vulnerable.

 

[jollystomper]

You could just not leave them an inheritance. Then you will have nothing to worry about from your grave.

 

[Katiek]

I don't have kids, so right now my inheritance goes to two siblings. But as my niece and nephew get older, they'll get named as a beneficiary for some part of it. At that point, I'll make sure they know the impact of keeping an inheritance separate, but I also expect they might use some of the funds for commingled assets such as a house and I'm fine with that. Right now, both of them are in serious relationships with people that I really like. Both of the significant others have worked very hard to put themselves through school and are sensible with their money. They're also very kind to our family. I don't have any great concerns about protecting any money from them. If my relatives were involved with people I thought were less responsible, I might feel differently.

 

[Luck_Club]

at the time of this thread

You’ve made your point, so why don’t you give it a rest.

Senator: to marry or not, is a very difficult decision. I truly believe in exclusivity. Ether the bond is legal ie marriage or only between two people. The point is pledging exclusivity to each other allows a man to support the off spring and a woman to count on the off spring being supported.

(I believe the ease of hooking up, (GoVT support) has caused the break down of the family, (especially the poor and minorities). This has led to many of our countries ill's.

My wife and I had a discussion about this just tonight. A close relative's spouse died from cancer, and the surviving spouse was in a relationship before the corpse was buried.

From my perspective my wife deserves a long morning period. Should it be the same length as our marriage in minutes, months, or years is what we need to figure out. At this point in time, I would never commit to another, though casual hook ups and string them along relation ships may be perfectly OK.

As a relative looking in, short morning periods are distasteful and disrespectful.

With no kids and no long term commitment from day one, my opinion would probably be completely different. You know what they say about opinions and the human anatomy don't you?

Just random ramblings...and a point of disagreement among two philosophies which usually coincide.

 

[nancyfrank232]

All marriages are on “solid footing” until they’re not

If you fail to plan, then plan to fail

 

[jollystomper]

The assumption in this thread seems to be: if your child's marriage turns bad, it is the other party's "fault".

But... what if it is YOUR child that turns the marriage bad? Would one still want to protect the child's inheritance and not help the other party your child has wronged?

 

[marko]

I agree a trust can be a good way to handle it. The more difficult part is what you want the trust to do. You need to define it's function when you set it up because it is difficult to change after you pass.

So what does your trust do if your child becomes addicted to drugs? Does it fund the problem? Or does it fund the help they need?

The difficulty of controlling from the grave is knowing what is best for the beneficiaries after your gone.
.

I personally wouldn't do a trust.

At some point, someone has to make a decision to spend $X on thing Y. With direct giving, it's my kid. With a trust, it's some person who is presumably not my kid.

I think it depends on how well the trust is written and how the trustee is assigned. A trustee could be a close relative who could look out for the beneficiary until a certain point in time; a trustee could also be given lots of leeway in determining how the money is spent and if/when to dissolve the trust. A friend of mine only gets his annual payment if he is gainfully employed! (no sitting on an Italian beach for you, bucko!)

If there's a lot of money involved, it also depends if you want your money to extend to future generations. In my case, my small trust was set up by my great-grandfather who died 40 years before I was born (talk about 'controlling from the grave'), but I was thankful 38 years ago when, going through a divorce that X-DW couldn't touch the principal and her payments stopped the day we left the courtroom.

We have set up our own trust for the support of my disabled brother and give the trustee (DW's brother or a niece) wide scope in determining how the money is spent on his behalf considering that his condition is likely to change over time.

So, one could lay down a set of broad guidelines and then give a good trustee a lot of flexibility to accommodate a changing world.

 

[neihn]

I will let the chips fall as they may. As long as my DW is taken care of, it doesn’t matter to me. My DD just got married and I gifted/sold one of my rental properties to her. If she gets divorced, half of it will go to her husband. C’est la vie!

+1

 

[athena53]

The assumption in this thread seems to be: if your child's marriage turns bad, it is the other party's "fault".

But... what if it is YOUR child that turns the marriage bad? Would one still want to protect the child's inheritance and not help the other party your child has wronged?

Thank you. My Ex inherited money from his parents and we put $100K of it down on a house. We had DS, I worked FT, the Ex was unemployed the last 5 years of the marriage and spent what was left of his inheritance in failed business ventures. The house, fortunately, was a very good investment- we split and he got 60% of the equity, I got 40%. My share was $100K, which I immediately put down on a smaller house, same school district. The Separation Agreement had no provision for child support- he wouldn't have paid it anyway. I put DS through a private boarding school when the public school system failed him and paid for half his college (Ex's sister paid the other half).

Six years after the divorce I remarried, we moved to a LCOL area and most of the equity I got out of the house went into investments, which helped my ER. The Ex went through his $$ and ended up on social programs before dying of cirrhosis at age 64. So.. yeah, the Ex-wife walked off with part of the inheritance, but I think my Ex's parents would be very happy with how I used it.

 

[Aerides]

Perhaps a better question is:

How do you protect your money without throwing a wrench into your kid's marriage?

Assuming they seem happily married or engaged, then the new spouse finds out that their darling new in-laws have felt the need to jump through such hoops? If I'm that spouse...ouch - guess those in-laws that just became my family, whom I adore and embrace....don't trust me at all?

If you're going to do this sort of thing, don't tell the kid or the spouse, just be quiet about it, let them find out after you're gone.

 

[nancyfrank232]

Coincidentally this article seems relevant:

My stepdaughter blew through an inheritance and was mysteriously fired from her job — what should we do with our $1.6M estate?

https://www.marketwatch.com/story/m...t-should-we-do-with-our-16m-estate-2019-10-31

 

[marko]

Family is family but family money is family money. Some new coming into the family can often confuse the two.

A pre-nup often has the same effect.

Perhaps a better question is:

How do you protect your money without throwing a wrench into your kid's marriage?

Assuming they seem happily married or engaged, then the new spouse finds out that their darling new in-laws have felt the need to jump through such hoops? If I'm that spouse...ouch - guess those in-laws that just became my family, whom I adore and embrace....don't trust me at all?

If you're going to do this sort of thing, don't tell the kid or the spouse, just be quiet about it, let them find out after you're gone.

 

[nancyfrank232]

Perhaps a better question is:

How do you protect your money without throwing a wrench into your kid's marriage?

Assuming they seem happily married or engaged, then the new spouse finds out that their darling new in-laws have felt the need to jump through such hoops? If I'm that spouse...ouch - guess those in-laws that just became my family, whom I adore and embrace....don't trust me at all?

If you're going to do this sort of thing, don't tell the kid or the spouse, just be quiet about it, let them find out after you're gone.

This is why money topics need to be discussed between parent and child (and between partners), continually and as soon as appropriate, and not be left for a couple decades when the child is “happy married”