The Child-in-Law Problem: How to Protect Your Child’s Inheritance from Divorce or Control

ESTATE PLANNING ESSENTIALS

When parents sit down to plan their estate, they usually start with the big picture: who gets what, when, and how. But as those conversations unfold, for many of my clients, a specific concern surfaces:

“We love our daughter-in-law, but she’s very involved in the finances.”

“I want to make sure my son-in law doesn't take my daughter's inheritance if they got divorced.”

“My daughter's husband has a new business idea every other Tuesday, and he hasn't been shy about asking us for money.”

Sometimes there’s a clear concern. Other times, it’s just a gut feeling or a worry. But the question behind it is always the same: how do we make sure the inheritance actually benefits our child—and doesn’t get rerouted under the influence of a child-in-law, or taken away in a divorce?

This is a real and legitimate concern. And the good news is, there are practical, effective tools available to protect the estate from going into the wrong hands.

This post will walk you through general legal principles where inheritance and marriage intersect, where the risk lies, and how you can build a plan that protects your child—so the estate can't be taken from them by accident.

What the Law Says: Inheritances Are Supposed to Stay Separate

Let’s start with the default rule—because it’s actually pretty encouraging.

Whether you live in Utah, a common law property state, or Arizona, which follows community property rules, the general principle is the same: an inheritance is legally the separate property of the child who receives it. It’s not automatically “shared” with their spouse. In theory, it belongs only to them.

So if your daughter inherits $200,000 from your trust, that money doesn’t suddenly become marital property. It starts out as hers and hers alone.

What does that mean? It means that if your daughter ends up in a divorce down the road, her inheritance isn’t split 50/50 with her soon-to-be ex. Legally, the inheritance remains hers—untouched by the divorce—as long as she hasn’t accidentally turned it into marital property along the way.

It also means that if your daughter-in-law has big plans to use the money for a luxury girls’ trip to Cabo, a closet full of Louboutin heels, and a new Peloton for the guest room they never use, your son is legally within his rights to say no. The law gives him the power to protect the inheritance and use it for his own needs, not as a shared asset—as long as he treats it that way.

That's the catch: that protection only holds if your child keeps it separate.

Where the Risk Really Lies: Commingling and the Disappearing Inheritance

In practice, most adult children don’t know these rules at all. They may not realize that an inheritance is considered separate property to begin with, or they’re simply not thinking about things like divorce, future lawsuits, or how easily the money could vanish under ten years’ worth of shared grocery bills and household expenses.

And even if they do understand that an inheritance starts out as separate property, they often don’t realize how easily that protection can be lost. The law does protect where the money came from—but that protection can disappear based on how the money is handled.

For example, if your child deposits an inheritance check into a joint bank account, or uses it to pay down a jointly held mortgage, it becomes extremely difficult—sometimes impossible—for a court to later trace what portion of that inheritance is still separate. At that point, a judge in a divorce proceeding will often just treat the whole thing as marital property, based solely on how it was mixed with joint assets or liabilities.

All it takes is one innocent move—like depositing the inheritance check into a joint account—and the separate property protection can evaporate.

This is what lawyers call commingling. Once an inherited asset is mixed with joint property—especially in a way that can’t be easily traced—it’s often presumed to be shared. That can create a huge headache in a divorce or legal dispute, and it can result in inherited money walking out the door in the wrong hands.

This happens in both Utah and Arizona. The legal nuances are different, but the outcome is very similar: without clear action to keep it separate, your child’s inheritance is vulnerable.

And the most heartbreaking part? In many cases, the child simply didn’t know. They weren’t trying to share the money. They just didn’t know any better.

Real Life Examples: The Scenarios That Keep Parents Up at Night

This is where the concern gets personal. For many parents, the issue isn’t just the legal framework—it’s what they see happening in their child’s marriage.

Maybe the spouse manages all the money, and you’re worried your child won’t have a say in how the inheritance is used. Or maybe the couple has different values around spending, and you’re afraid a lump-sum distribution could be gone in a year.

Other times, it’s less about today and more about what might happen later: What if they get divorced? What if there’s financial trouble? What if they remarry?

It’s not about being paranoid. It’s about being thoughtful. And most importantly, it’s about doing the one thing your child may not think to do for themselves—protect what you’ve built.

What You Can Do: Practical, Protective Tools

There’s no one-size-fits-all solution to this problem—but there are several smart options that, used well, can provide real peace of mind.

Let’s walk through a few of the most effective strategies.

Start by Educating Your Children

The best place to begin is often the simplest: help your child understand the rules.

If they know that inherited money is supposed to be separate property, and they understand the risk of commingling, they’re far more likely to protect the inheritance themselves.

You might be surprised how many capable, intelligent adults simply don’t know that depositing a check into a joint account—or using inherited funds to pay the mortgage—could turn separate property into shared marital property.

Some families choose to include their children in a meeting with the estate planning attorney. Others leave behind a written summary with their estate documents. However you approach it, education is the first—and often most effective—line of defense.

Use a Subtrust to Keep the Inheritance Legally Separate

For families who want to go further, one powerful option is to leave the inheritance in a subtrust for the benefit of the child.

This means that, instead of the money going directly to your child upon your death, it flows into a trust created specifically for them. The trust has its own name, its own bank account, and even its own tax ID number. It’s not jointly owned, and it can’t be accidentally deposited into a shared account.

By its very nature, the trust keeps the inheritance separate. Even if your child isn’t watching closely—or their spouse is overly involved—the legal structure holds the line for them.

And here’s the beautiful part: your child can still access the funds. The trust doesn’t have to be restrictive. It just keeps the inheritance protected while offering flexibility in how and when it’s used.

Built-In Protections That Work Automatically

A subtrust has a few quiet advantages that most people don’t think about.

First, it creates a natural boundary. The distributing Trustee who creates the subtrust can't deposit the funds into a commingled account. The funds mustbe placed in a separate account, and therefore maintain its separate property status. So there are no unintended conversions to marital property.

Second, it forces separate treatment. To use the funds, the child, if serving as their own trustee, is bound by the terms of the Trust. That alone can prevent impulsive decisions or outside influence.

And finally, it gives you the ability to customize further, if needed, based on the specific circumstances of the child and your own goals and priorities.

Tailoring the Terms for Extra Peace of Mind

If you’d like an added layer of protection, you can shape the trust to suit your family’s unique needs.

For example, you can:

• Allow your child to serve as trustee, giving them full control

• Appoint a third-party trustee—like a trust company or investment firm—to manage the funds objectively

• Create guardrails around distributions (like staggered ages, purpose based distributions, or other clear guidelines)

• Include provisions that limit or delay access if the child is going through a divorce, lawsuit, or bankruptcy

These aren’t just legal features. They’re ways of making sure the inheritance is actually used for the benefit of your child, in good times and bad.

And best of all, these decisions are entirely private. They don’t go in a court record. They don’t signal distrust. They simply create structure—and structure is what keeps your good intentions from getting derailed later.

The Spectrum of Control: Finding the Right Fit

One of the things I often tell clients is that you don’t have to choose between total control and no control at all. There’s a full spectrum available—and your plan can land wherever feels right for your family.

On one end, you might leave everything outright to your child. That’s the simplest approach, and it works fine if your child is savvy and the marriage is rock solid.

Not that you should assume nothing will go wrong - but people sometimes prefer simplicity at the expense of protection. Fair enough, as long as you've been educated.

Outright distributions come with the most risk—especially if the children don’t understand the rules about commingling.

On the other end of the spectrum, you might use a tightly managed trust with a professional trustee and detailed distribution terms. That approach offers the strongest protection—but it also gives your child the least control.

Most families fall somewhere in the middle. And the best part of working with an estate planning attorney is that we can find that sweet spot together—balancing trust, flexibility, and protection in a way that reflects your values and your family’s dynamics.

Final Thoughts: You’re Not Being Overprotective—You’re Being Smart

If you’ve had these concerns, you’re not alone. And you’re not being controlling, or paranoid, or difficult.

You’re being smart.

You’ve spent years building a life, saving money, and making sacrifices to benefit your children. You have every right to want that legacy to be protected—even if your child someday finds themselves in a situation they didn’t see coming.

And here’s the good news: there’s a way to do it that’s thoughtful, kind, and effective.

A good estate plan doesn’t start fights. It prevents them. It doesn’t create obstacles. It clears them. And it doesn’t assume your child will face hardship—but it quietly protects them if they do.

If you’re ready to start that conversation, I’d be honored to help. Let’s build a plan that reflects your love, your trust, and your wisdom.

Justin J. Wall, Esq.

Trusts & Estates Attorney

Utah and Arizona