Factors to Consider Before Disinheriting a Child
Disinheritance is often the driving force behind movie and television plots, but disinheriting a child or grandchild in real life should be approached very carefully. It's both an emotional and a financial decision and it can have significant ramifications, such as prompting a will contest and having your wishes overruled by a court.
There are ways to do it and ways not to do it if you're contemplating cutting your offspring out of your last will and testament or other estate plan.
It's virtually impossible for a parent to disinherit their minor child in any state. Courts will invariably provide for the child from your estate funds until the child reaches the age of majority, often 18 years old.
Controlling an Heir's Behavior
Don't use the threat of disinheritance as a way to manipulate an heir's current behavior. You might want your child or to do or not do something, and you think that threatening them with disinheritance will make them act or not act in that way.
The end result is that you're using money as a control mechanism, and that rarely works out well. Consider exploring other solutions to the problem instead.
Controlling an Heir's Inheritance
You can create a living trust to control an heir's inheritance if your concern is that your child will blow their inheritance irresponsibility, maybe on fast cars, drugs, alcohol, or extravagant trips. The trustee can transfer funds in small increments rather than giving the entire inheritance at once, or pay bills directly on your child's behalf.
This can be accomplished by setting up a lifetime trust for the heir's benefit and giving the trustee specific instructions as to how and when distributions can be made. You can include incentives such as going to college, working a full-time job, or staying drug and alcohol-free.
You can't include incentives that would be against public policy, however, such as marrying or divorcing a certain individual, or practicing or not practicing a specific religion.
Give Someone Else Power of Appointment
You can also give the trustee of a lifetime trust the ability to "re-inherit" your child. This can be accomplished by giving the trustee a power of appointment that can be exercised in favor of "re-inheriting" the person you've disinherited.
Make Your Intentions Clear...
Make your intentions of disinheritance clear if you decide to disinherit your child in your last will and testament. Don't simply fail to mention them.
Specifically state your intent to disinherit. Seeing it in black and white will certainly drive the point home and it might even discourage a will contest that's based on grounds that the disinheritance was accidental or an oversight.
Most state courts will assume the omission of your child from your will or trust terms was an oversight if you don't make your position perfectly clear. They could award a portion of your estate if you don't make your intentions known.
You might also want to document your decision, then keep copies of that documentation with your will. This can be as simple as making journal entries indicating that you're considering disinheritance and why, or citing individuals with whom you've spoken about your decision.
Documentation can also help prove that your decision wasn't impulsive and that no one else coerced you into it, both of which are potential grounds for a will contest.
You might want to consider including language such as, "I am intentionally disinheriting Susie for reasons I deem to be good and sufficient and therefore, for all purposes of this will, Susie will be deemed to have predeceased me." Include this at the very beginning of your will.
...But Don't Be Too Clear
By the same token, you don't want to meticulously list your every grievance in your will or trust formation documents. This, too, can open the door for your disinherited child to challenge the will if it can be proved that the circumstances you've cited have changed.
For example, maybe you don't want to trust your son's wife with access to the assets or cash you've amassed over your lifetime...but he's divorced her by the time of your death. Or maybe he's a terrible spendthrift, but he's seen the error of his ways and now owns a profitable corporation.
Your disinheritance provision can potentially be overturned if you say, "I don't trust John's spouse, Mary," or "John has no sense of fiscal responsibility," if neither is the case any longer—even if it's only one of several reasons why you're reluctant to name him as a beneficiary.
Be wary of stating specifics that might no longer be accurate at the time of your death.
Leave a Modest Bequest Instead
You can also get your point across by leaving your heir a token gift, something small so it's clear that you haven't unintentionally overlooked or forgotten about them.
You might have heard tales of someone who was left $1 in a will. Now you know why.
Include a No-Contest Clause
Some states allow you to state in your will that should any of your beneficiaries challenge it, they'll lose what you did give them if they're unsuccessful at having your will overturned.
Of course, your child would have no reason not to file a will contest if you didn't make any bequest to begin with, but it can provide some food for thought if you're at least a little bit generous.
Update Your Beneficiary Designations
Check your beneficiary designations and update them, too, if necessary. These are sometimes overlooked in the haste to make sure that a potential heir is disinherited in a will or trust. You might have cut them out of those documents...but they're still named in your life insurance policy to inherit a windfall at the time of your death.
State Laws for Disinheriting Adult Children
Although you can't disinherit a minor child who's legally entitled to parental financial support, you can disinherit adult children in all but one state—Louisiana. And even in Louisiana, you can only do so under limited circumstances.
Louisiana law won't let you disinherit children who are 23 years of age or younger, or children of any age who, because of mental incapacity or physical infirmity, are permanently incapable of taking care of themselves or managing their finances. An adult child can only be disinherited for "just cause."