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Wednesday, August 26, 2009

What do the in-laws get?

I met with two separate sets of clients this week who asked similar questions. They wanted to know if they were leaving a part of their estate to their married adult child, and the child died before they did, whether the child's spouse would inherit the share that the child would have received if living. This is a very common question.

For example, John and Mary are the parents of Dan and Doreen. Dan marries Janet. John and Mary make Wills leaving their estate equally to their children, Dan and Doreen. Dan dies before his parents do. The question is whether Janet gets Dan's share of the estate.

In Alberta, the answer is no, Janet does not get it, unless John and Mary's Wills say that she does. Most parents whose children are now adults choose to state that should one of their children die before they do, the child's children (John and Mary's grandchildren) will inherit the share that the child would have received. This is also what would happen if John and Mary did not make Wills and the estate was distributed according to intestacy laws. The general rule is that inheritance follows bloodlines, and a son-in-law or daughter-in-law is not in the bloodline.

This is the kind of issue that you should talk out with your estate planning lawyer to make sure you understand what would happen in your case. For example, if Dan and Janet have children who are under the age of 18 and who inherit money from their grandparents, the money must be held in trust until they become adults. During the time the money is in trust, it would be quite common that some amounts would pass through the hands of the surviving parent (in this case, Janet) on behalf of her children. Sometimes this is a problem for the grandparents, if, for example, Dan and Janet were divorced. If that were the case, John and Mary might not be comfortable allowing the children's money to be handled by Janet.

You can give fairly specific instructions in your Will about how trust funds are to be handled. It's always a good idea to be up front about your concerns and goals so that your lawyer can make suggestions about how to address them in your Will.

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