Can I Disinherit a Family Member?

Estate Planning, Probate, Trusts, Wills / Blended Families, Capacity, Competence, Disinherit, Fraud, Living Trust, Partial Disinheritance, St. Petersburg, Undue Influence, Will

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, opioid addictions create huge challenges for families and some individuals are 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. 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 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. 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. 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. In some states—check with your estate planning attorney—it can only be challenged by the beneficiaries of the trust.

There can always 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. Courts don’t always like it, but heirs may think twice about challenging your will.

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”

Common Estate Planning Mistakes That You Can Avoid

Estate Planning, Power of Attorney, Trust, Wills / Beneficiaries, Caregivers, Competence, Documents, Estate Planning, Funding, Healthcare Proxy, Incapacity, Inheritance, Long-Term Care, Nursing Home, Powers of Attorney, retirement, Retitling, St. Petersburg, Successors, Titling, Trusts, Wills

The number one estate planning mistake is failing to have or to update an estate plan, says the Times Herald in the article “Top six estate planning mistakes.” Therefore, start by working with an estate planning attorney to create an estate plan, and you’ll be way ahead of most Americans. Why does this matter?

An estate plan allows you to stay in control of your assets while you are alive, provide for your loved ones and for yourself in the event you become mentally or physically incapacitated, and when you die, give what you have worked to achieve to those you wish. It costs far less to take care of all of this while you are alive. It’s a gift to those you love, who are spared a lot of stress and costs if it must be figured out after you have passed.

Once you have a plan in place, you have to keep it updated. An estate plan is like a car: it needs gas, oil changes, and regular maintenance. If your family experiences significant changes, then your estate plan needs to be reviewed. If you change jobs, have a change in your financial status, or if you receive an inheritance, it’s time for a review. When there are changes to the law, regarding taxes or non-tax matters, you’ll want to make sure your plan still works.

The second biggest mistake we make is failing to plan for retirement. If you start thinking about retirement when it is five or 10 years away, you’re probably going to be working for a long time. When you are in your twenties, it is the ideal time to start saving for retirement. Most people don’t start thinking about retirement until their thirties, and many don’t plan at all.

There are many different “rules” for how to save for retirement and how to calculate how much income you’ll need to live during retirement. However, not all of them work for every situation. Advisors are now telling Americans they need to plan for living until and past their ninetieth birthday. That means you could be living in retirement for four decades.

Mistake number three—failing to fund trusts. Trust funding is completely and correctly aligning your assets with your trust. If you don’t fund the trust, which means putting assets into the trust by retitling assets that include bank accounts, investment accounts, real estate, insurance policies and other assets, adding the trust as an additional insured to home and auto insurance policies and have every change verified, you have an incomplete estate plan. Your heirs will have to clean up the mess left behind.

Fourth, failing to communicate your estate plan to your executor, beneficiaries and heirs is a common and easily avoidable mistake. Talk with everyone who is a part of your estate plan and explain what their roles are. Speak with the person you have named as Power of Attorney and Healthcare Proxy on a regular basis. Make sure they continue to be willing and able to perform the tasks you need them to do on your behalf. Make sure they know where your documents are.

Fifth, don’t neglect to make arrangements for bills to be paid and financial matters to be handled, when you are not able to do so. There are many studies which show that after age 60, our financial abilities decrease about 1% per year. Expect to need help at some point during your later years and put a plan in place to protect yourself and your spouse. If you are the main bill-payer, make sure your spouse can take care of everything as well as you, before any emergency strikes.

Finally, talk with your successors about what you would like to happen if and when you become mentally unable to make good decisions, including caregiving options. As we age, the likelihood of needing to be in a nursing home or other care facility increases. You can’t necessarily rely on your spouse living long enough to take care of you. Make sure that your financial power of attorney contains the appropriate gifting language, your assets are titled properly, and your successor financial agents know about the plan you have created. If you don’t have a long-term care policy now, try to buy one. They are less expensive than having to pay for care.

Protect yourself, your family and your loved ones by addressing these steps. You’ll be giving yourself, your spouse and your loved ones peace of mind.

Reference: Times Herald (Dec. 14, 2018) “Top six estate planning mistakes”

Can I Disinherit a Family Member?

Common Estate Planning Mistakes That You Can Avoid

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