ALTERNATIVES TO DISINHERITING YOUR CHILD
November 28, 2016
By Cory Howes
It’s most common that parents choose to leave their estates in equal shares to their children. There are situations, however, when parents intentionally leave one or more children out of their estate plans.
Sometimes, people have what they consider legitimate reasons, such as the fact that one child has been more successful than others (and does not “need” the money), not wanting a child with special needs losing any type of government benefits, or not wanting to leave an inheritance to a child that may be irresponsible or have serious problems, such as drug dependence.
Sadly, parents may also want to disinherit children who are estranged from the rest of the family, or worse yet, use a disinheritance as a method of settling scores or having the last word in a disagreement with a child.
Regardless, the disinheritance of a child can be hurtful and permanent. This act will affect the child’s relationship not only with the parent (if the parent’s wishes are made known during their lifetime), but also with siblings and potentially other family members. We see a lot of discord among family members where a disinheritance occurs, and we’ve seen many lawsuits and scarred relationships among family members result from the practice. There is a huge symbolism, in addition to the economic realities, associated with an inheritance, and the symbolism can be even stronger with a disinheritance.
Let me walk you through a few scenarios that may show you how shortsighted a disinheritance can be. First, let’s take the case of the “more successful” child. Often, a person who appears to be more successful can merely be hiding trouble behind the scenes. Lots of factors can change a today’s success into tomorrow’s failure—finances can change, jobs can be lost, marriages collapse, people become ill or involved in an accident. If the adult child is unwisely disinherited, and unless specific provisions are made for them, the next generation grandchildren will also suffer disinheritance.
Now, let’s take a look at the special needs child that risks losing government benefits. There are many causes of disability—birth, illness, injury, or even substance abuse—that may entitle a person to government benefits currently or in the future. Many benefits are available only for those with minimal assets and income. However, disinheriting a child is a drastic, unnecessary step, when other estate planning vehicles, specifically trusts, can remedy the situation. An attorney can carefully design a special needs trust to supplement—and not jeopardize—benefits provided by agencies at local, state, and federal levels.
Trusts can also provide a great vehicle of financial care for children who are either irresponsible with money or in bad situations due to alcohol or drug abuse. Since the child may need help now or in the future, and situations can and do sometimes change for the better, parents should consider designing a trust to meet the needs of children with these issues. Trustees may be given discretion on whether to provide or withhold financial assistance according to particular circumstances, or parents may stipulate that certain requirements are met for funds to be released.
The choices we make with regard to our children and how they fit into our estate plans reflects upon our values and faith. To that point, keeping a child in your will, even when he or she has caused grief or heartache, can send a message of love and forgiveness to that child and the rest of the family. Conversely, disinheriting a child—even for what seems like a good reason—may convey anger, resentment, or, worse yet, a lack of love.
Here’s something you should strongly consider: if you have previously disinherited a child and later reconciled, update your estate plan immediately. And if you’ve made that unfortunate, final decision to disinherit, consult with your attorney on the best way to handle your situation. Also, you should consider telling your child of that decision sooner than later. You don’t want it to come as a surprise, nor do you want them blaming other family members for your decision. This may save further heartache and substantial legal bills from costly court battles.