I don’t want my daughters’ husbands getting their hands on my $2 million

My wife and I live in California, as do three of our four grown daughters. We are revisiting our family trust for the first time in many years, as we are getting older and have gradually built up an estate worth a couple of million dollars. We want to make sure that if our daughters get divorced, our hard-earned money goes to them and not their ex-husbands.

We consulted with two real estate lawyers and got different answers. The first said that there is nothing we can do to legally enforce that the inheritance remains separate; the most we could do is insert a sentence like “It is our desire that the money remains separate”. The second lawyer said we can make our children sign a prenuptial agreement as a condition of their inheritance.

Furthermore, we have a daughter who has already been married for five years and has three children; another newly engaged daughter; and two other children, who are single. Our married daughter does not have a prenuptial agreement. How do we protect our gift to her? A retroactive prenuptial agreement? How should we proceed?

Father of four girls

Related: They’re threatening to go to a lawyer’: My in-laws gave us $300,000 and are registering the deed to our house. Now they insist that we give our granddaughter $125,000.

“Do not allow this money to become a club with which to control the lives of your daughters.”

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Dear father,

Money should bring freedom and opportunity, not control and coercion.

Your intentions walk a fine line between expectations and legality. There is little you can do to prevent your daughters from sharing their inheritance with their spouses, assuming they all get married and some of those marriages end in divorce. It is a credit to you that you have accumulated a couple of million dollars, but do not allow this money to become a club with which to pull the purse strings in the lives of your daughters.

One solution to your problem: You could set up a lineage trust, a revocable trust that dictates how you should leave your assets to your direct beneficiaries — in this case, your daughters — and that becomes irrevocable upon your death. It can only be used for your daughters and their sons and, as it becomes irrevocable upon your death, it is not accessible to creditors, should you have any. There are disadvantages. For example, such a trust might, unless otherwise specified, exclude stepchildren and adopted children.

First, the good news: Inheritance in California is considered separate property. Whether you leave your children real estate or brokerage or savings accounts, that money will remain non-marital property unless your daughters use it to improve their family home or in some other way merge those assets with their estate community. This prevents your married daughter from having to ask her spouse to sign a postnuptial agreement.

In this regard, however, it is unwise to use this legacy to tell your daughters what they should do as part of their marriage. There should be a clear boundary between your relationship with your adult children and their relationships with their respective partners and spouses. It is not a good idea to interfere in the latter. This could cause discord in their relationships and also cause unnecessary hurt and tension in your relationships with your daughters.

“California is one of the few states that strictly adheres to community property laws, which state that property acquired during a marriage [are] community, also known as marital property,” according to Myers Family Law in Roseville, California. “However, California also draws a line when it comes to personal inheritances, including inheritances received during marriage. Inherits are treated as separate property, belonging to the person who received the inheritance.”

Legal gymnastics

Requiring in your will that your daughters receive their share of your estate as long as they share none of it with their husbands represents impractical and legal gymnastics. What they do with their inheritance is their business, unless you place those assets in a trust with strict instructions about how those assets should be used – for your grandchildren’s education, for example – or use the trust to provide an annual income.

There are so many variables out of your control. What happens if you die before your wife and she has different ideas about how to settle your community estate? What if your daughter’s husband is asked to sign a prenuptial agreement and responds, “No way, who does your father think he is?” The best thing to do is to make your daughters aware of how to handle inherited separate assets and how they might accidentally get mixed up.

Think about the quality time you have left with your family. You don’t want Thanksgiving dinners to turn into a battle royal or, worse, a situation where your daughters and their partners gradually grow apart and reevaluate their relationships with you. You’ve worked hard for your money and are trying to protect your family’s wealth. But there are times in life when you can do too much and hold your family too close, even if that’s not your intention.

Ask yourself some soul-searching questions before proceeding. Do you really want to force your children to sign a prenuptial agreement to receive their inheritance? The prenuptial agreement can be contested and modified at a later time. What’s more important: the two million dollars you’ll leave behind or the relationship you have with your daughters while you’re still here? Don’t put a price on your daughters’ love for you or their love for their spouses.

Sorry to be preachy, but Shakespeare also wrote a play about estate planning. His name was “King Lear”.

The Moneyist regrets that it cannot answer questions individually.

Previous articles by Quentin Fottrell:

“I grew up pretty poor”: I received an annual bonus. After I pay off my credit cards, I will have $10,000. What should I do with it?

“I received an insurance claim check for $22,000” – why on earth does it take five days for my check to clear?

“I want to protect my family”: My rich father, 49, is marrying his third wife. How can I address the issue of my heritage?

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