We live in a world of fractured relationships. For example, there are blended families that never truly blended; kids who feel left behind because of their parents’ divorce and loved ones who’ve gone completely off-the-tracks because of an addiction or another problem. If your relationship with a close family member has fractured, you may want to disinherit that person, as distasteful as it may be.
If disinheriting someone is your goal, it’s essential that you get the help of an experienced estate planning attorney familiar with the law in your state. Never try to disinherit someone yourself. If you do, there is a very real possibility the person you want to cut out of your estate plan will be able to successfully appeal your action in court after your death.
Advantage of a Living Trust Over a Will
When you want to disinherit someone, there are a number of reasons why it’s better if your estate plan is a living trust rather than a will. That’s because if you disinherit someone using a will, it’s easy for that person to challenge your decision.
For instance, he or she may claim you were under the “undue influence” of someone else when you wrote your will—a new spouse or another child, perhaps—and therefore the disinheritance provision reflects the other person’s intentions, not yours.
Or, the individual you’ve left out of your will may challenge the validity of your decision by alleging fraud—that you didn’t understand what you were signing when you signed your will and that you were mentally incapable of making any decisions at the time.
Another reason a living trust is the better option: a will is a public document, which means that anyone can find out who you disinherited. As a result, the person you left out of your will may be motivated by shame and embarrassment to challenge your decision.
A well-done living trust on the other hand, is a totally private document. Also, in most states, only the beneficiaries of a trust can challenge its provisions.
It’s true that the person you’ve disinherited could try to challenge the terms of a living trust by alleging that you were incapacitated when you created it and again the victim of fraud. But the problem with attacking a trust on these grounds is that most people who create living trusts do so at least several years before their death, unlike wills which are often written shortly before death. Consequently, the creator of the trust has probably opened accounts in the name of the trust and used those accounts to pay bills.
The fact that you have a track record of using the trust in this way makes it much, much harder for someone to claim you didn’t know what you were doing when you executed it.
Advice About a Partial Disinheritance
If you won’t be totally disinheriting one of your children but will leave him or her less than your other kids (sometimes known as a “partial disinheritance”), your estate plan—regardless of whether if it’s a will or a living trust—should include a strong “No Contest” clause. The technical term for this clause is “In Terrorem,” which literally means to strike terror into someone.
This clause is important because sometimes, the child (or children) who is receiving less may want to contest the distribution. A No Contest clause, however, says to each of your children that if you contest my estate plan, you get nothing!
Although courts generally do not like this kind of clause, because they view it as harsh, including it in your will or living trust can make someone think long and hard about a initiating a contest. In other words, the child may decide that getting some of your estate is better than the possibility of ending up with nothing.
Beneficiary Designations and Disinheritances
Many, if not most, of your assets will be distributed upon your death according to who you named as beneficiaries; assets such as Individual Retirement Accounts, 401(k)s, annuities and life insurance policies. Therefore, an easy, and usually effective, way to make sure that someone doesn’t receive any of these assets upon your death is simply to not name him or her as your beneficiary.
If you already have, it’s easy to remove that individual and name someone else.
Furthermore, the process of distributing funds from these kinds of assets to your beneficiaries is totally private. So, no one other than the individual who receives the money and the Internal Revenue Service will know. Your bank and financial adviser can also put PODs (Payable-On-Death) and TODs (Transfer-On-Death) on the accounts you have with them; these kinds of accounts work much like beneficiary designations.
A reminder: If you’ve previously named someone as a beneficiary that you now want off (a former spouse, for example), change the designation immediately.
Blended Families and Disinheritances
If you are a parent in a blended family, you may face some unique disinheritance-related issues.
For example, friction between a stepparent and an adult stepchild can explode after the death of that child’s natural parent. This is often a special concern when the husband dies first and the new wife is left to deal with his adult children. Often, the father of a family in a divorce has a more distant relationship with his children than a mother might have, and his children may resent their stepmother, seeing her as a threat to their inheritance.
Consequently, tensions that were kept beneath the surface while the husband/father was alive often reach the boiling point quite quickly after his death. Whether the stepchild is actually considering a challenge or just wants to see a copy of the will or the living trust, the surviving wife/stepmother can experience a lot of stress as a result.
The easiest way to protect a surviving spouse in a blended family from this kind of stress is for each spouse to give the other total control over their property should he or she die first.
A simple will or living trust does this by allowing the surviving spouse to easily change the beneficiaries of the estate and to even disinherit a “bad kid.” Also, this approach minimizes the likelihood of a challenge because the stepchildren will understand that their inheritance depends on their being nice to their surviving stepparent.
Finally, if your will or living trust has a provision to “split” the estate upon the death of the first parent (sometimes called a “bypass trust” or an “AB Trust”), then the spouses will want to include a “Power of Appointment.” This would give the surviving stepparent the right to disinherit a problematic stepchild without waiting for that child to file a formal contest in court.
Powers of appointment are very difficult to challenge and may be the silver bullet needed to stop threatening phone calls and annoyances from seemingly greedy stepchildren.
Disinheriting a loved one should never be done lightly, because it can trigger difficult rippling effects throughout a family for years. On the other hand, some people feel they have no choice but to exclude someone from their estate plan. If that is your decision, it’s essential that you do it correctly and effectively.