What Should You Consider When Disinheriting A Child?
Although most parents intend for their hard-earned money to pass on to their children, grandchildren, and other heirs, there are some situations in which disinheriting one or more adult children is not only desirable, but necessary. If you're concerned your ne'er-do-well son or daughter will squander his or her inheritance or use it to sink deeper into drug or alcohol addiction, withholding these funds entirely or putting them into a spendthrift trust may be the most prudent choice. Read on to learn more about some of the factors to consider when disinheriting an adult child, as well as the wealth management strategies you may be able to use to ensure your wishes are carried out even after your death.
What should you consider when deciding to disinherit an adult child?
Your first step should be to review the testacy laws of your state to ensure you're legally permitted to disinherit an adult child. Most states will allow adults to disinherit other adults to whom they're not married or otherwise legally bonded; however, some states have restrictions or specific language you'll need to use to ensure your wishes are made clear, so it's important to educate yourself on your own state's requirements before executing a will or related documents.
You'll also want to consider the personalities involved – the executor of your will, any trustee you appoint to administer assets within a trust, and any other children who will inherit. Estate squabbles can become messy even among families who get along well in the best of times, and if you think one or more of the parties at issue is likely to side with your disinherited child, you'll need to take some extra steps to ensure your wishes (and the reasons for them) are heard.
What financial planning methods can you use to ensure your disinherited child cannot claim your assets?
Although listing out your intentions in your final will and testament may be all you need to do to legally express your wishes, wills aren't foolproof – and if your disinherited child chooses to contest the will and can provide evidence that you weren't competent to make this decision at the time you signed your will, he or she may be able to recover funds from your estate.
As a result, you may need to create an irrevocable trust during your lifetime and place some of the assets you wish to distribute in this trust. By doing so, you'll exempt these funds from your estate, and they'll continue to be distributed according to your wishes after you've passed away, regardless of anything that happens (or doesn't happen) with your will.
Another alternative for those who don't wish to entirely disinherit a child, but only limit their spending ability, is a spendthrift trust in your disinherited child's name. These types of trusts permit only periodic withdrawals of a relatively small amount of principal, ensuring your child has access to some funds without providing him or her with the financial means to get into major trouble.
By reviewing these options with an experienced financial planner or estate planning attorney, you'll be able to rest assured knowing your funds are in good hands both before and after your passing.