This is never a decision to be made lightly, but we do live in a world where families aren’t always as perfect as their holiday cards. Some blended families never really blend, addictions create huge challenges for families and some individuals are simply family in name only. In that case, says Next Avenue in the article “How to Disinherit a Family Member,” you may choose to disinherit someone.
The first step is to work with an experienced estate planning attorney who practices in your state. 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. Reason being, a will is easier to challenge because the probate process essentially invites disgruntled beneficiaries to challenge to the decedent’s will. 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 could also claim that you signed the will without understanding what you were signing, and that you were not mentally competent and could not make legal decisions at that time.
After you die, your will becomes a public document filed with the local courthouse, and anyone can find out who you decided to disinherit. They may be angry or embarrassed and feel the need to set the record straight, challenging your will to prove their worth.
A living trust, when prepared correctly, remains a totally private document. It can only be challenged if a person proactively brings the issue before the court. Unlike a probate (when a will is used as opposed to a trust) there is no built in forum for a challenge to be asserted by a disgruntled beneficiary. That is huge, because someone will have to hire an attorney and initiate a lawsuit in order to attempt to challenge a trust.
Even with a trust, however, there can always be allegations that a person was mentally incompetent to sign their 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 tough 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 (in California, it further requires that the challenge had no probable cause). Courts don’t always like it, but heirs may think twice about challenging your will if they have something to lose by risking their partial inheritance.
Remember that many of your assets are in accounts with beneficiary designations: IRAs, SEPs, investment accounts, life insurance policies, etc. Review the names on your accounts to make sure the person you want to disinherit does not appear on those accounts. You can also use Payable on Death (POD) or Transfer on Death (TOD) on accounts to keep that “disinherited” person from knowing about assets moved to other heirs outside of your 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.
Disinheriting someone, for whatever reason, can create hard feelings that remain for generations. If you feel you have no choice, speak with your estate planning attorney to be sure it’s done correctly and lessen the chances of any challenges.
Reference: Next Avenue (Dec. 11, 2018) “How to Disinherit a Family Member”