Dear Len & Rosie,
My father-in-law is a shrewd businessman who owns a great deal of land and is worth millions. He’s also difficult to talk to and says he has a will, end of story. He says he doesn’t care what the kids have to go through after he dies because he’ll be dead! My husband has three other siblings, two who live on Dad’s property.
My husband also has an unpaid child support arrearage from 20 years ago when he was in an accident and didn't know that he had to go to court to stop support payments while he was injured. When my father-in-law passes away, there will be a big mess.
Is there anything we can do? My husband’s siblings want to sell it all after their father’s death and pocket the money, but they seem blissfully unaware of taxes and probate
Some people remain unaware of the need to do estate planning, and are under the impression that everything will work out after they die without a lot of effort. These people are usually wrong, but do not mistake your father-in-law for one of them. He’s a multi-millionaire, and he’s no dummy. He probably knows what he is doing.
There is not a lot that can be done about your husband’s child support debt. Even a spendthrift trust or a dynasty trust will not protect your husband’s inheritance from child support creditors. As a matter of public policy the courts will not allow a trust for your husband’s benefit to avoid paying this child support debt if the trustee has any discretion to give your husband any money under any circumstances.
The only way your father-in-law can guarantee his wealth won’t be used to pay off your husband’s child support arrearage is to disinherit him. Unless the child support debt is so great that it will eat up most of your husband’s share, your husband will be much better off inheriting his share outright and doing the right thing by paying off his child support debt.
Your father-in-law should have a revocable trust, because it will save his beneficiaries thousands of dollars in legal fees. He may also want to consider creating a family limited partnership with his children, to reduce the amount of federal estate tax that will be due upon his death. He should also consider creating dynasty trusts for each of his children, so that their inheritance won’t be subject to estate tax when they die.
Unless your father-in-law is willing to explain himself to you, there’s no way that you can know for sure why he does not want a trust. It’s a good idea to urge your father-in-law to seek the advice of an estate planning attorney, but remember that it’s his money, and he does not have to justify himself to you, and he does not have to create a trust to avoid probate. Sometimes parents react poorly when children or in-laws talk to them about estate planning, especially if they come off as being pushy or even worse, greedy, so tread lightly. Your husband will be much better off if your father-in-law dies with a will leaving him a one-quarter share, rather than dying with a trust that leaves your husband nothing at all because he didn’t like his daughter-in-law, even if she was right all along.
Len & Rosie