How to Prevent Disinheritance of Your Own Children
Most people have two conflicting estate planning goals. On one hand, they want to take care of their spouse or life partner if they should die first. This means that if you die first, you want your spouse or partner to be able to continue living in the house and use the contents of that house. You want your spouse or partner to be able to continue driving the car and have access to the bank accounts.
On the other hand, the majority of people also want their children or other loved ones to inherit something when they die. For instance, they want their children and grandchildren to get family heirlooms and family photographs. They often want the balance of their estates to go to these loved ones.
These goals are often in conflict, and only careful estate planning can provide a balanced solution that avoids a lawsuit. Many people do not realize how easy it is to accidentally disinherit their loved ones.
Perhaps the most common way that children are disinherited is the use of beneficiary deeds or joint tenancy deeds on real estate (or joint ownership of bank accounts). Here is a common example of how this works:
Husband (“H”) and Wife (“W”) have two children. H dies. W is lonely and remarries Second Husband (“H2”). W wants to show her love and commitment to H2, so she retitles the house into her and H2’s name as joint tenants with right of survivorship. She also changes the ownership of her bank accounts to be jointly owned with H2. Then she dies. The house and bank accounts suddenly belong to H2. What can the children do? Probably nothing.
Notice how easy it was for H and W to essentially write their children out of their wills.
So, how can you make sure your children or other loved ones will not be disinherited? Here are some common characteristics of good estate plans:
Use of Well-Prepared Trusts. In order to have the most flexibility and control over the disposition of your assets when you die or become incapacitated, you need to use a trust. Every situation is different, and most trusts and wills need to be custom drafted to be appropriate to your particular circumstances. A good estate planning attorney will spend hours preparing your will and trust documents to fit your specific situation.
Advice of Attorney. If you want to ensure that your estate plan will work, you need to see an estate-planning attorney. Preparing the estate plan documents is only part of the solution. You also need to have the life insurance titled correctly. Also, retirement plans such as 401(k)s and IRAs may need special attention. Document preparers are prohibited from giving advice about these crucial decisions because of the prohibition against practicing law without a license.
Proper Use of Irrevocability Provisions. If a person has children or grandchildren, the section in that person’s trust that addresses when the trust becomes irrevocable can become very important.
Example: Married couples often want joint trusts, reciprocal wills and other reciprocal estate planning documents. These documents commonly state that the surviving spouse is the beneficiary for his or her lifetime, and then the remainder of the assets is distributed to their children.
However, what happens if one spouse dies and the other remarries or enters another relationship? It is very common nowadays for elderly single people to live together rather than get married; that way they do not jeopardize each other’s pension and retirement benefits. An older person may make up for this by making his/her new friend (or new spouse or caretaker) the beneficiary of the earlier trust (or devisee of the person’s will).
This is the point at which the original children get left out of the trust or will.
When the older person dies, the children naturally expect to be involved in the person’s funeral and burial arrangement, to handle the person’s final affairs and perhaps to inherit something. It can come as a surprise to the children when a total stranger is now in charge of the funeral or memorial service. It comes as even more of a surprise that this total stranger inherits everything.
What often determines if later amendments to a trust or Will are valid and enforceable is whether the earlier, original documents provided that the trust or Will would continue to be revocable and amendable.
If you are married or in a committed relationship, and you want to make sure your children will be the beneficiaries of your combined estate, you can make sure that some or substantially all of your combined assets are in a trust that becomes irrevocable when one of you die or become incapacitated.
Contracts to Make Wills. A person can form a binding contract to benefit one or more people or organizations upon his or her death by entering into a binding contract to that effect. Like any other contract, this requires a definite agreement, fair and adequate consideration, and clear and certain terms. If the contract requires that a certain amount of life insurance be maintained, the beneficiary should be a well-drafted trust. A premarital agreement can also contain such an agreement.
Having Attorney Retain Originals. The best practice is probably for your attorney to keep your estate plan documents (and for your documents to state that they are being retained by the attorney). This makes it more likely that your estate plan will remain consistent because your attorney will be more likely to remind you of your original wishes to benefit certain loved ones. If your original attorney assisted you and your spouse (or life partner), and you die, that attorney will have an ethical duty to avoid frustrating your intended testamentary arrangement.
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