Sometimes, as the difficulties of life wind through families, it is decided it would be best to disinherit a family member. It can be done. However, it needs careful legal consideration, according to Next Avenue in “How to Disinherit a Family Member.”
The first step is to work with an experienced estate planning attorney who practices in your state. This is a complicated process, and if you don’t do it right, it’s entirely possible the person you want to disinherit can appeal your action in court after you’ve died—and win.
A living trust may work better than passing all your assets through a will when you want to disinherit someone. A will is easier to challenge. He or she may say you were being influenced by someone else when you had your will written, and, therefore, the disinheritance does not reflect your real wishes. They also could claim that you signed the will without understanding what you were signing, and that you were not mentally competent to make legal decisions at that time. This is a charge of fraud.
After you die, your will becomes a public document, and anyone can find out who you decided to disinherit. The disinherited family member may be angry or embarrassed and feel the need to set the record straight.
A living trust, when prepared correctly, remains a totally private document. In some states—check with your estate planning attorney—it can only be challenged by the beneficiaries of the trust.
There always can be charges of fraud as a result of your being mentally incompetent to sign the trust. However, most people who create living trusts do so several years before their death. Wills are often written or revised shortly before death. Therefore, the person who created the trust has likely opened accounts in the name of the trust, used the accounts, paid bills, etc. That activity makes it hard to prove incompetence.
What if you want to leave someone only a partial inheritance? Your best bet is to ensure that your estate includes a strong “No Contest” provision, technically termed “In Terrorem.” It’s a little harsh, but the general idea is that whoever challenges the will, gets nothing. It does make people think twice.
Remember that many of your assets are in accounts with beneficiary designations: IRAs, SEPs, investment accounts, life insurance policies, etc. Review the beneficiaries named on your accounts to make sure the person you want to disinherit does not appear as a beneficiary on those accounts. You also can use Payable on Death (POD) or Transfer on Death (TOD) accounts to avoid passing assets under a will.
Blended families face unique challenges. Friction between stepparents and stepchildren can explode when one parent dies and the second spouse is left without the other parent as a buffer. Tensions that were kept under the surface may bubble up quickly. Make sure that all the children know what your plans are for your estate to avoid breaking up the blended family after you are gone.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances and allows you to distribute your assets under a will or trust as you choose, including disinheriting a family member.
Reference: Next Avenue (Dec. 11, 2018) “How to Disinherit a Family Member”