I’ve already shared Estate Planning for Your Pets from the book Estate Planning 101.
As I explained in that earlier post, the book is the new work from my blogger friends Vicki Cook and Amy Blacklock.
They own several sites together, Vicki is the founder and blogger behind Make Smarter Decisions, Amy is the founder and blogger behind the award-winning site Life Zemplified, and they both write for top level money sites around the web.
Their new book contains everything you want to know about estate planning and I highly recommend it.
Today I have another excerpt from it — this time dealing with the thorny issue of deciding to disinherit someone or not in your estate plan.
I selected this passage for ESI Money because it’s a unique issue that some people face and I wanted to be sure I covered it. It’s titled “Choosing to Disinherit (or Not)”.
Before we get started, the lawyers are making me say that the following is excerpted from Estate Planning 101 by Vicki Cook and Amy Blacklock. Copyright © 2021 by Simon & Schuster, Inc. Used by permission of the publisher, Adams Media, an imprint of Simon & Schuster. All rights reserved.
Once you’ve read this excerpt, please leave your thoughts in the comments below if you’re considering disinheriting someone in your estate plan (as much as you’re willing to share). Perhaps other readers will learn from your wisdom and insights.
With that said, enjoy this portion of the book…
You Might Reconsider Leaving Them Out Completely
One of your primary goals in estate planning is determining who inherits your assets. It may be an easy decision for some people, but others struggle to include certain heirs. The disinheritance of a spouse, partner, child, or stepchild is more common than you might think. But disinheriting someone isn’t as easy as only leaving them out of your will or trust. Heirs who have “standing” can challenge legal paperwork after your death and may win the right to receive a portion of your estate.
While you may have good reasons to disinherit someone, keep in mind that you won’t be around to witness the results of this decision. Disinheritance can cause highly emotional conflicts and create even greater division between family members. That’s why it’s essential to understand what it means to disinherit someone. You need to understand who you can disinherit and why. Alternatives to disinheritance and steps to take when deciding to leave someone out of your will are also important to know.
When you leave an heir out of estate planning documents, you disinherit them. And disinheritance can happen accidentally for a variety of reasons. But you may also want to intentionally prevent an heir from receiving any part of your estate.
Accidental disinheritance can result from failing to update your will after having a baby or getting remarried. Selling an asset that you left to an heir in your will could leave them without anything when you pass away. To prevent unintentional disinheritance, always review your estate plan after major life events and at least every few years.
While you may want to disinherit an heir purposely, laws in your state may prevent you from doing so. Let’s look at who people attempt to disinherit and whether it’s legal to do so.
Can You Disinherit a Spouse?
In general, you can’t intentionally disinherit a spouse unless a valid prenuptial or postnuptial agreement is in place. A spouse can legally disinherit a surviving spouse by not passing them the property they brought into the marriage (separate property) as designated in the marital agreement.
Legally recognized domestic partners generally have the same inheritance rights as surviving spouses. Although state laws vary widely, a disinherited spouse without a marital agreement usually receives a portion of a deceased spouse’s estate. In most states, surviving spouses are protected from total disinheritance by elective share law.
Elective share rights also vary. Some states allow a disinherited spouse to elect to take a portion of the deceased spouse’s probate and non-probate assets, along with titled property. Others restrict this to the probate estate and just some non-probate assets.
But a majority of states that use elective share law only allow a disinherited spouse to take a portion of the probate estate. And if an estate is set up to avoid probate, a spouse may end up with no inheritance.
In a “community property” state, the surviving spouse generally receives at least half of the community property (all property the couple owns together) when the first spouse passes away. Before a spouse dies, they can choose to leave their half to their surviving spouse or other named beneficiaries.
What about Disinheriting Kids?
Adult children generally do not have any rights to inherit a portion of your estate. But minor children have different rights that protect their interests.
Whether you should disinherit an adult child is a difficult question to answer. There may be various reasons why you’re considering cutting off a child from receiving financial assets after your death. You may be estranged from them, they may display ongoing irresponsible behaviors, or you may have already provided for them substantially as an adult. But if you’re questioning whether to disinherit a child, you might think again and seek counsel from your attorney.
Disinheriting children is a powerful message and one that can affect them for the rest of their lives. Keep in mind that it may also impact more than just the child you disinherit. If they contest your will or trust, it can further damage any relationship they have with siblings and other family members.
Don’t DIY a Disinheritance
If you plan to disinherit a child, don’t just leave their name out of your will. Work with your attorney to determine the language needed in your paperwork to make the disinheritance valid. Otherwise, your child could still be awarded a portion of your estate.
You might consider an alternative to disinheritance before writing them off completely. Your attorney may suggest giving smaller gifts to an adult child rather than totally disinheriting them. Another option is adding a “no contest” clause to your estate planning documents to encourage a child to accept what you’ve left them.
Setting up a trust with a third-party trustee is another way to structure your estate, so you control the timing and amount of distributions to an adult child. You could also adjust a beneficiary designation to leave a small percentage of an asset to this heir. A disgruntled child may be less likely to challenge your estate and cause more family drama if you include them in at least some manner.
IF YOU DECIDE TO DISINHERIT
If you intentionally leave someone out of your will, make sure those you leave behind won’t be left fighting with the one you disinherit. It’s your job to prepare ahead to prevent an heir from challenging your will or trust.
You may decide to leave a letter of disinheritance explaining why you made specific decisions in your estate plan. It may be a challenging letter to write or for your heirs to read. But it can detail why individual gifts were made and explain any disparities between inheritances to beneficiaries. You can also suggest how to use gifts and add other sentiments that don’t belong in a will.
While it may seem extreme, in some circumstances, an attorney might suggest having a medical evaluation to prove your competence when creating your estate plan. They might also recommend an independent review of your plan, so you have more witnesses backing up your decisions.