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…
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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.
DEFINING DISINHERITANCE
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.
I was married for 30 years to my husband who had three children from a previous marriage. We had one one together. His three children were horrible, I hate to say that, but it’s true. Tons of financial drama, always on a steady stream of “economic outpatient care” and treated him like a wallet.
After he passed, they ghosted me after they bugged me about what they thought they should be getting from a life insurance policy that he had. It was a small policy, I was the beneficiary, and it basically paid for all the funeral expenses and other bills we accumulated while he was sick. I was also out of work (lost my job and stayed home to be his caregiver, he had terminal cancer.)
Long story short, I put a trust together and got my finances in order about 6 months after he passed. Many people said to me I was under no obligation to leave them a dime. We have a decent-sized estate, rental properties, etc. But I decided to leave them each 10% for a total of 30% of the estate, then divided the rest up for my son, charities, and the person named as executor.
I did a lot of soul searching and thought about what my husband would have wanted and I know he would have wanted them to get something. They are all in their 40s, financially disabled (if that is a term for it) and my thought process was if they want to “sit around” and wait for the money to fall in their laps instead of making their own, is their choice. Women in my family live a long time, so they will be waiting a while, and I will be gone.
No drama after I am gone, let them have something. At the end of the day, who cares. Would they leave me anything, nope, not a dime, but the last thing I want is them fighting over money with my son after I pass.
If you didn’t formally adopt his children, then I question whether they have any legal standing under your will (unless you include “stepchid” in the will’s explicit definition of the term “child”) … in other words, any contest on their part would seem doomed to fail. Of course, whether you *want* to leave them something for whatever reason or you just want to (hopefully) avoid future litigation are other matters entirely. Did you have an attorney draw up the trust (and any will)? Did you ask her/him the question re: inheritance rights? I don’t claim to be an expert on wills (and less regarding trusts), and am interested to learn more.
I think you are a kind person to respect what he would want. I feel the same way about my wife’s children. I am setting up a trust for my wife to have income until she passes and then my estate will go to charity. I did this because my wife’s family would talk her out of the money or suggest bad investments. If my wife passes first, I will see that her children get something as I know that is what she would want. I have two sons who will get nothing. I may leave something for my grandchildren but not at this point in their lives.
One thing I found after executing my parents’ seven figure estate is that the will had almost zero impact on anything. There was less than $100,000 in assets subject to probate because all the investment accounts listed my brother and me as 50-50 beneficiaries. The will had no authority over life insurance distributions or on any funds that had designated beneficiaries. They had long since sold the house and only one used car and a few other items had to go through an expedited probate process. I believe you could effectively disinherit a child simply by not listing them as one of the beneficiaries or listing them but only designating a token amount of the account to them.
Totally agree. I have seen this with other family members whereby the elder family member decided to identify different beneficiary percentages for each of his children on his brokerage & IRA accounts. Since the beneficiary designations take precedent to what is stipulated in the Will, the Will could, for example, indicate equal inherited percentages to each of the children and it won’t matter as everything is outside of the Will.
My question is about Survivor Trusts. My mother and father had a Suevivors Trust. My father died.. before my mother died she rewrote her Survivor Trust and excluded me from her Trust.
Do I have any rights from my Father’s original Trust?
This is a timely and helpful post, ESI, as I am assisting an Uncle with this very issue. He is 94 and his wife is 92. They have three adult children (my cousins) who were dysfunctional teens and have grown into unproductive adults, despite the efforts of their parents. There are a lot of moving parts (divorces, out-of-wedlock births, runaways, etc.) and the number of inheritors keeps changing. At the moment, it stands at 13.
My Uncle’s attorney had some great advice that stuck with me, as I witnessed the conversation: don’t tell the inheritors that they are inheriting, or what they are inheriting. I’ve made that mistake myself, and have to unwind it at some point.
I declined to be the Executor, as I did not want the inevitable ‘pressure’ of my cousins wanting the eventual spoils. So, my Uncle has made provisions for a professional Executor who will be paid by the hour ($150/hr). Money well spent.
Very helpful comments. I am currently the executor of sister’s future estate and dreading dealing with stepchildren and dysfunctional son🙄