Navigating Inheritances
By: Financial Hotline
Winter 2026 (Vol. 43, No. 4)
DISCLAIMER: This article is for informational purposes only and is not intended as legal advice. Please consult an attorney for advice specific to your situation.
Q: My son is my only heir. I love him, but he and his wife are irresponsible with money. How can I ensure my estate isn’t depleted quickly and that funds remain for my grandchildren?
A: Use estate planning tools to control distributions and protect assets. The best option is usually a trust with spendthrift provisions, which:
- Prevents your son from selling, pledging, or assigning his interest.
- Shields assets from most creditors while in the trust.
- Allows controlled payouts (e.g., monthly/annual stipends, discretionary for health/education/ maintenance/support, or incentive-based).
- Bars lump-sum access to principal.
Name an independent trustee (professional, bank, or trusted person—not your son or his wife) to manage it responsibly.
To ensure your grandchildren are provided for you could make your son a lifetime beneficiary (receiving income and support), with remaining assets passing to grandchildren upon his death. You can also:
- Name grandchildren as remainder beneficiaries.
- Create separate sub-trusts for them.
- Use generation-skipping or dynasty trusts for longer term/multi-generational protection (possible in some states, with tax benefits).
A revocable living trust (becoming irrevocable at death) often avoids probate and can reduce taxes, though trust income may be taxable. Trusts require precise drafting so it’s best to avoid DIY forms. We recommend you consult a qualified estate planning attorney in your state.
Q: How is an inheritance treated in a divorce?
A: Inheritances are generally separate property and not counted as marital or community property in all U.S. states, so they’re usually not divided. This applies whether received before or during marriage.
However, an inheritance can become divisible through:
- Commingling which means mixing the inheritance with marital funds. Examples include depositing funds into a joint account, using inherited funds to pay down a joint mortgage, or to buy or improve marital property or other assets.
- Transmutation. Actions that treat the inherited asset as shared marital property, even unintentionally, can cause transmutation.
- Active appreciation. Value increases from marital efforts from funds may be divisible while the original amount stays separate. Examples include asset appreciation and interest or dividends.
Q: How can I keep inherited assets separate and protected?
A: Most states agree on these general guidelines:
- Keep inherited funds and assets in separate accounts and titles in your name only.
- Avoid using inherited funds for joint expenses or to improve marital assets.
- Maintain clear records showing no mixing.
- Use a prenuptial agreement to designate inheritance as separate property.
- Use a transmutation agreement to define assets obtained during marriage as separate (this is also referred to as a postnuptial agreement).
Q: Can a spouse be completely disinherited?
A: No, in most states, a surviving spouse can’t be fully cut out without their consent. Many common law states allow a spouse to claim one-third to one-half of the estate (via an elective share), even if the will states otherwise.
Q: Do children have a legal right to inherit from parents?
A: Generally, no. Parents can disinherit children in most states. Exceptions include protections for pretermitted (omitted) children, homestead rules, or minor children in some cases.
Q: What’s the difference between a will and a trust for inheritance?
A: A will directs distribution after death but requires probate (public, often slower, and costlier). A trust (especially revocable living) manages assets during life and after death, often avoids probate, provides more control (e.g., staggered distributions), and offers privacy.
Q: Can I refuse or disclaim an inheritance?
A: Yes, beneficiaries can decline an inheritance, often for tax reasons or to pass it to others. It must be disclaimed properly which usually means in writing and within a time limit to avoid complications.