Making Cents: Disinheriting your children’s spouse

US Wealth Napolitano |

By: John P. Napolitano, CFP®, CPA, PFS, MST

When one of your children is in the process of divorce, it is likely that all of their assets will be a part of the marital estate and available for settlement. That may include any assets that were gifted by you, inherited from a family member, or currently co-owned with anyone. This really causes heartache when they later learn that some of the assets may have been excludable from the marital estate with a little advanced planning.

The simplest way to protect important assets or family assets such as a business, or a legacy home is through a prenuptial agreement. These agreements are typically, and best signed before a marriage and may exclude any particular asset that the couple agree to exclude. It is possible, however, to execute an agreement like this after the marriage although there may be a few nuances to the process and agreement.

Absent a prenuptial agreement, a second way to protect assets from a future marital issue can be done through the method by which you bequeath assets to the next generation. Too many people simply leave there assets to a surviving spouse, with any remainder to be divided equally amongst the children after the passing of the surviving spouse. I understand the equal part, but I don’t understand why your advisors didn’t raise these significant issues and leave the assets subject to the possibility of a future marital issue. This is particularly important with respect to an operating business or any assets that will be owned and operated by more than one child after your passing. The divorce rate is still around 50% and it is negligent to believe that your children’s marriage cannot fail. Furthermore, asset protection when it comes to leaving assets can protect for issues beyond divorce, such as a major lawsuit against your child in law or a major illness that may require substantial amounts of funding.

You shouldn’t feel bad disinheriting your child’s spouse, especially if there are grand children involved. Imagine your son passing away prematurely, with his inherited assets then passing directly to his spouse. What happens to those assets if your daughter-in-law gets re-married? The answer is that he is likely to inherit them should daughter-in-law pass, thereby disinheriting your grandchildren. I’m sure this isn’t what you had in mind.

The fix is to establish trusts which will inherit the assets for the benefit of your children with these protections built in. It means that you’ll need an independent trustee, and some pretty easy to follow rules. If your child respects the rules of the trust, and doesn’t constantly reach into the pocket of the trustee or if the trustee has the power to restrict regular withdrawals, the protection is likely to work.  This strategy is most important when it comes to family business assets or other assets where there is legacy intention. You may be healthy today – but that is not a good reason to have a sub-par plan.


This information is not intended to be a substitute for individualized legal advice.

John Napolitano, US Financial Advisors, US Wealth Management and LPL Financial do not provide legal advice or services. Please consult your legal advisor regarding your specific situation.

John P. Napolitano CFP®, CPA is CEO of U. S. Wealth Management in Braintree, MA.  Visit JohnPNapolitano on LinkedIn or The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. John Napolitano is a registered principal with and securities offered through LPL Financial, Member FINRA/SIPC. Investment advice offered through US Financial Advisors, a Registered Investment Advisor. US Financial Advisors and US Wealth Management are separate entities from LPL Financial. He can be reached at 781-849-9200.