When it comes to planning your estate, you can never be too careful. It is important to think about your property, the family members you value, and how you want your assets to be distributed after you pass. For many, in-laws play a huge role in the family unit. As a result, it may be your wish to leave them assets or an inheritance after you pass. However, it’s important to have foresight when you do so to avoid your assets from being passed in a way you didn’t originally intend.
Understanding the potential pitfalls of including in-laws in your will is crucial for preserving your family’s wealth and ensuring your wishes are followed. Whether you have a positive or negative relationship with your in-law, there are steps you can take to protect yourself and your family. At Verhaeghe Law, our Edmonton wills and estates lawyers can help you address in-laws in your estate plan pragmatically. To discuss your individual family circumstances with our legal team, schedule a consultation today.
Naming Your In-Law as an Executor or Trustee
In-laws are often named as executors or trustees by a testator. Executors are in charge of carrying out the terms of your will after your passing. Trustees are meant to hold and distribute any property left in a trust to named beneficiaries in accordance with terms set out in the trust deed. Both roles carry significant weight and responsibility and can give position holders influence over the administration of your estate.
If you have a positive relationship with your son or daughter-in-law, naming them as an executor or trustee might seem like a great idea. You may have developed familiarity and trust with them over a long period of time. In addition, depending on their skillset or profession, your in-law may seem like the best candidate for the job in comparison to your other relatives.
However, it’s important to recognize that the in-law you name as an executor or trustee may still be entitled to keep their role even if they divorce or separate from your child. In addition, because the estate administration process can take several months or even years, it’s possible that your in-law and child will divorce or separate after you have already passed and can no longer make adjustments to your will. In these cases, your child’s ex-spouse has no obligation to step down from their responsibilities.
To help address these risks, there are protective measures you can take when appointing your in-law as an executor or trustee in your will. They include:
- Conditional Appointments: You can add conditions to your estate plan that require your child’s spouse to be married to your child at the time of your death in order to proceed with their role as executor or trustee. You can also require that your in-law be married to your child at the time of your child’s death (if they pre-decease you) to maintain their role.
- Alternate Arrangements: You may name alternate executors or trustees in your will to avoid your in-law having sole responsibility for the administration of your estate or trust. In addition, you can add a clause to your will that terminates the appointment of your in-law as an executor or trustee if their relationship with your child changes. This clause can apply before or after your passing.
Leaving Money or Gifts to Your In-Laws
The act of leaving part of your estate or gifts to your child’s spouse after your passing may seem like the right thing to do, especially if you have a close relationship with them. You are entitled to name your daughter-in-law or son-in-law as a beneficiary or contingent beneficiary of your estate in your will. This means they will receive some or all of your property after you pass away.
However, there are certain factors you should consider before doing so. These include:
- Continuity of Marriage: If your in-law is named as a beneficiary, they will remain a beneficiary even if they get separated or divorced from your child. This is true unless the divorce occurs before your passing and you update your will accordingly.
- Risk of Wealth Passing Out of Your Family: If your child divorces their spouse and they are named as a beneficiary in your will, they will still receive the assets you left them. If the divorce was contentious or they ever get remarried, they might choose to pass these assets to individuals outside of your immediate family. For example, an in-law who remarries may not leave any money to your grandchildren, but instead only to members of their new family.
- Protection for Descendants: When your child’s inheritance is funnelled through their spouse, it might leave your grandchildren or other blood relatives with less to inherit in the future. This may be true whether your child and their spouse get divorced or stay together.
If you would like to leave your in-law property or assets without naming them as a beneficiary, there are alternative strategies you can use to do so while protecting your estate. You may want to consider:
- Small Cash Legacies or Gifts: Instead of naming your daughter-in-law or son-in-law as a direct beneficiary of your estate, you can leave them a gift of a specified, limited sum to show your appreciation. You may also choose to leave them an item of sentimental value. This will make sure your in-law still gets something, but it will not impact the main distribution of your estate.
- Family Trusts with Specific Instructions: You can set up a trust that includes your in-law alongside your child or grandchildren as beneficiaries. Trusts give you an added layer of control when leaving money to in-laws, as you are able to set the conditions under which they’re able to receive their inheritance.
- Letter of Wishes: If you do not want to include your in-law explicitly in your will but you would like to make sure they receive something, you may create a Letter of Wishes to leave to your immediate relatives. This is a non-binding document that allows you to express your wishes regarding the sharing of the inheritance. While your in-law may have no legal claim to your estate, your child or other beneficiaries can take your letter into consideration.
These strategies allow you to avoid common pitfalls that occur when leaving assets, gifts, or inheritances to your children’s spouses. If you have questions about alternative pathways that might work for your family, you should consult with an experienced wills and estates lawyer.
Can You Prevent Your Son or Daughter-in-Law From Inheriting Assets?
Although many people have close, positive relationships with their children’s spouses, some do not. Negative connections can form for a variety of reasons, but it’s important to know that there are steps you can take to protect your estate from an in-law. You can choose to exclude an in-law from your estate plan entirely if you wish to do so. In addition, you can design a trust to exclude non-blood relatives while still benefiting your child or grandchildren.
If you are worried about the safety of your child’s inheritance should they get divorced from their spouse, you might encourage them to create a prenuptial agreement or marriage contract that specifically protects their assets from division. You may also choose to include a “Community of Property” clause in your will. This is an express statement that the inheritance you are leaving should only be accessible by the beneficiary you name. In addition, it declares that the inheritance you leave should not form a part of your beneficiary’s net family property at any point.
Although the Alberta Family Property Act does not usually subject gifts or inheritances to equalization upon divorce, there are scenarios in which the co-mingling of assets might compromise their “protected” status. For example, if your child decides to use part or all of their inheritance in relation to their matrimonial home, it may become part of their net family property (even if you have included a community of property clause in your will). If you are worried about such situations, you should speak with your beneficiaries directly about the importance of keeping their inheritances or assets separate from their spouses.
Have Questions About In-Laws and Your Estate Plan? Contact Our EdmontonWills & Estates Lawyers
Planning your estate can be complex and emotionally taxing, but being thorough and detailed is of the utmost importance. When it comes to daughter-in-laws and son-in-laws, figuring out how to address them in your will might feel complicated. Understanding the benefits and risks of leaving assets to your children’s spouses can help you plan responsibly.
At Verhaeghe Law, our dedicated Edmonton wills and estates lawyers have years of experience creating estate plans tailored to your family’s needs. If you have questions about including your in-laws in your will, we can outline your legal options and protections. To discuss your situation, schedule a consultation with our team today.