The issue of in-laws comes up quite often when I advise clients about estate planning. Most of the time it is a discussion that a client does not want their son-in-law or daughter-in-law to receive anything from their trust. And sometimes it is a client wanting to provide for their in-law. I recently had a discussion with a client that they specifically wanted to provide for their in-law if their child and that in-law WERE divorced at the time of their death, which was a new one for me. The discussions are usually easy to determine what the intent is and coming up with proper language, but when you want to restrict a beneficiary from marrying or a spouse from remarrying, you have to be careful to not to have an impermissible restraint on marriage or encouraging divorce.
Several years ago, my client was a beneficiary of a subtrust created under their parent’s trust. The sub-trust provided that the assets would remain in the sub-trust with someone else managing the assets with limited distribution provisions unless the beneficiary was unmarried. The beneficiary had been married for a long time to their spouse and it was apparent that the parent, who was the settlor of the trust, disliked the in-law and did not want anything going to them. The trust was irrevocable, but I was able to get a court order modifying the terms due to that distribution provision encouraging my client to divorce their spouse so they would have more access to the funds.
If a trust provision distributes assets to a beneficiary, but then revokes that gift if the beneficiary remarries or is married to a particular person, then that provision could be considered a restraint on marriage and can be voided. There are often that my client wants to allow their spouse to use the residence or other real property for their lifetimes, but only if they remain unmarried or cohabitating with a partner. Depending on how that provision is phrased, it could be permissible. For example, if a trust provides for income and access to principal for the surviving spouse’s lifetime, but then it is terminated and distributed to someone else if the spouse remarries, then the court may find that to be a restraint on marriage and invalid. But, if the duration of the distribution is measured by the beneficiary remaining unmarried, then it could be permissible. The intent of the settlor is extremely important in determining if the provision is a limitation on marriage.
So how do you tell the difference between what is a restraint on marriage and what is not? The court in the Estate of Horgan (1949) 91 Ca.App.2d referenced the distinction as follows:
For example, in case of a testamentary disposition of property to one on condition he remains unmarried, the intent of the testator is that the language shall constitute a condition subsequent terminating the estate in fee and vesting in others on his marriage. Such a condition is void as in restraint of marriage. On the other hand, a devise of property to one so long as he remains unmarried is a limitation and valid. (id. at p. 621)
In summary, make sure the distribution language does not encourage divorce or discourage marriage by not conditioning the distribution on a beneficiary from being unmarried or on condition that they remain unmarried.