Can I Keep a Loved One’s Inheritance From Their Spouse?

A recent nj.com article asks, “How do I protect my niece’s inheritance from her husband?” The article says that in a scenario where someone plans to leave most of her estate to her niece but doesn’t want her estranged husband to get his hands on the money, she must be proactive to make sure the funds go where she intends them to go.

One option is for the aunt to leave the assets to the niece outright or in trust. If the property is distributed to the niece outright and she then gets divorced, in Massachusetts, the inheritance would be subject to equitable distribution in the subsequent divorce proceeding. If left in trust, however, the issue of whether trust assets would be subject to the divorce proceeding is determined on a number of factors, such as access to assets, co-mingling of trust assets with marital assets, and recent case law. In short, an outright bequest may not be the best way to leave property to the niece, even though it’s probably the most economical, straightforward method for the aunt. While the cost of creating a trust-based plan is more expensive than a will-based plan, the use of a trust may be more advantageous depending upon your unique objectives.

When your estate plan designates someone, whether a child, niece, or close friend, to inherit your assets and that someone has creditor problems, marital problems, and maybe even substance abuse problems, it is best to discuss how to design your estate planning documents so that you plan for certainty and not destiny, with unforeseen outcomes and beneficiaries.

Reference: nj.com (August 21, 2019) “How do I protect my niece’s inheritance from her husband?”