Family harmony is important. “The family is a haven in a heartless world.” Christopher Lasch. But, unfortunately, when family disputes arise, they can be deep rifts. “Family quarrels are bitter things. They don’t go by any rules. They’re not like aches or wounds; they’re more like splits in the skin that won’t heal because there’s not enough material.” F. Scott Fitzgerald.
One such deep rift involved an 85-year-old Austrian grandmother who had over $1 million (in Euros). She cut up her money in tiny pieces rather than having it go to her heirs. The story is here.
If your client wants to disinherit some or all of their family, they don’t need to take out the scissors. They could simply say that they are leaving those family members nothing and say to whom the assets should go, like a charity or friends.
Often, when some or all of the family is disinherited, it makes sense to leave those people a reduced bequest and then include a “no contest” or “in terrorem clause”. Such a clause leaves the person nothing if they challenge the estate plan. By doing this, the people to be cut out have an incentive not to make trouble by contesting the plan. In order to be effective, the reduced bequest should be significant, so as to discourage them from losing it if they were to challenge the estate plan.
Perhaps the best way to make sure the client’s wishes are carried out is for the client to communicate those wishes during life so that heirs are not surprised after they are gone.
Stephen C. Hartnett, J.D., LL.M.
Associate Director of Education
American Academy of Estate Planning Attorneys, Inc.
9444 Balboa Avenue, Suite 300
San Diego, California 92123
Phone: (800) 846-1555
Latest posts by Steve Hartnett (see all)
- Beneficiary Designations, etc., Aren’t a True Substitute for a Trust - February 19, 2019
- New Tax Proposals - February 12, 2019
- State Income Taxation of Nongrantor Trusts - February 5, 2019