Estate Plan: What to do with a problematic in-law?

I see the impact of problematic in-laws on a weekly basis.

To be clear, I struck gold with my own in-laws. They are extremely supportive and loving. I don’t think I’m going out on a limb to say the feelings are mutual. One of the hardest things about social distancing to prevent the spread of COVID-19 is not being able to spend time together in person. Thanksgiving and the rest of this holiday season are going to be particularly difficult.

But not everyone has a great relationship with their in-laws. In fact, based on what we see in our office, it is not uncommon for families to have at least one problematic in-law. Someone who is just out of sync with the rest of the family.

Why does a problematic in-law impact your estate planing?

If you do not yet have an estate plan and you do not have a surviving spouse, Wisconsin law designates your children as the “natural objects of your bounty.” That means your child or children will inherit your estate. When you have family harmony, this makes sense. In fact, for those who have the foresight to make an estate plan, most leave their estate to their children (if there is no surviving spouse). Many of us sacrifice a bit throughout our lifetimes with the hope of passing some inheritance to our children. It is the natural order of things.

Some things are out of our control

And then your child goes off and marries someone you distain. Not someone who is a little annoying. Someone who is simply awful, loathsome, and repulsive. If your child inherits your estate, what happens if she predeceases you? Allows his spouse to consume the inheritance? What if she gets divorced?

(Photo: Gillette Blog)

Part of growing up is allowing your child to make their own choices. But our choices have consequences. There are a few techniques you can use in your estate plan to address the problematic in-law. This is not about teaching your child a lesson. It is about protecting the inheritance.

The most extreme option is to disinherit your child. The Wisconsin Supreme Court recently reaffirmed that one of your most important rights is the power to dispose of your property as you choose and, therefore, parents have no duty to leave their estate to their children. Nonetheless, disinheriting a child can have significant emotional and financial consequences for your loved ones. It can be emotionally painful for the child. It can also deny your child funds that could provide additional financial stability. Her siblings may feel guilty for inheriting their sibling’s share of the estate. And it can lead to a court challenge and protracted litigation over the inheritance.

You have options

In the alternative, you can work with your lawyer to decrease the likelihood that the problematic in-law receives anything from your estate. The most common approach is to hold the funds in a trust for your child’s benefit and restrict the spouse’s access to the funds. Then, if your child gets divorced, the assets are protected and preserved for your child. And upon your child’s death, the funds can be directed to your child’s children (your grandchildren) or divided among your surviving children and/or charities.

You can also skip a generation and gift the funds to your child’s children. This is actually a common approach when a child predeceases – even when you like the in-law. You can accomplish this through outright gifts to your grandchildren or holding the inheritance in a trust for their benefit until they are old enough to manage the funds responsibly.

Your estate plan, or lack thereof, cannot be corrected after you die. If you find yourself struggling with your child’s choice of spouse, you would benefit from a conversation with a lawyer who specializes in estate planning. There may be a way to avoid or minimize conflict with a problematic in-law and maximize your child’s access to the inheritance.