It is not uncommon for the attorneys at Halcomb Singler, LLP to meet with an estate planning client who wishes to leaving nothing to a particular family member. The act of excluding or cutting a person out of your estate plan (through a will or a trust) is sometimes called disinheriting. Many times a mother or father wishes to leave all of their assets at the time of death to 2 out of 3 children, for example. The reasons that a person may wish to disinherit a child or other family member are complex and personal. For example, parents may wish to disinherit a child because they already spent a lot of money on that child’s education and wish to “even out” the amount of funds spent on each child. Or, perhaps one child took a loan from the parents that was never repaid. From time to time the parents simply do not care for that child or family member and do not wish to leave them any money from their estate. The purpose of this blog is to review the legality and prudence of such a decision and the legal tools that are used to accomplish these wishes.
First, is it is completely within the right of a person having an estate plan prepared to disinherit a relative (so long as the relative is not your spouse.) For purposes of this blog we will assume that the person being disinherited is the natural child of the parents who wish to disinherit.
So, now that we have established that a parent is within his or her legal rights to disinherit a child, it is important to discuss the ramifications of doing so. At Halcomb Singler our attorneys will are happy to craft an estate plan that will prevent a child from taking under a will or trust. However, there are also some points that should be explained to a client prior to taking this action. First, we want our clients to seriously contemplate this major decision to make sure it is truly their long-term wish. The time and cost involved with estate planning is not extreme, but there is cost nonetheless. So, it is best to think it through to make sure that it is not the result of a fleeting disagreement or another reason that may pass. Second, it is often a very hurtful and confusing revelation for a child to find out after the passing of his or her parents that he or she was disinherited. We want our clients to think through how it will effect that adult child prior to making a final decision. Sometimes the client will decide not to disinherit, but to leave a lesser amount to one child (and perhaps event to have a conversation with that child regarding the rationale behind the decision) after they have had a chance to reflect.
When an estate planning client is certain that they are intent on one adult child being left $0.00 at their time of death we explain the potential legal acts that the disinherited child may take. First, it is important to note that it is not uncommon for a disinherited adult child to file a will contest. A will contest is a lawsuit in which the disinherited child sues to invalidate a will based on undue influence, lack of capacity or other statutory grounds in Indiana. A person who wishes to file a will contest has 90 days to file a lawsuit from the date that a will was offered for probate. This statute of limitations is extremely limited, so it is certainly possible that a disinherited child may miss the deadline. Nonetheless, in the event that a disinherited child does file a will contest, there is also an Indiana statute that says that in the event a will contest is brought in good faith that the estate (the money you want to leave to your other children) will pay for the attorney fees of the person who filed the will contest. That’s right, your disinherited child does not need to have a large amount of money to go retain an attorney. There is no shortage of Indiana attorneys who will take a will contest case without any money up front because they are aware of the statute. The bottom line is that will contests (and litigation in general) are expensive. In the event that the estate is less than $200,000.00 there would be a very real possibility that the estate would be eaten up by attorney fees with little or nothing left for your family members.
Now that you are aware that a will contest is not a preferred outcome, you are probably wondering what you can do to prevent a will contest. One option might be to consider a trust. Unlike a will contest, where it’s possible for the contesting party to have his or her attorney fees paid from the estate’s assets, in a trust contest usually only the Trustee defending the trust is able to have his or her attorney fees paid from trust assets. The contesting party in a trust contest must foot the bill for his own attorney, thus providing a serious disincentive to filing a trust contest. Another option might be to reallocate assets in such a way that you can direct specific beneficiary payments which would pay assets directly to intended beneficiaries, and investing in classes of assets that are not subject to payment of claims, etc. There are many strategies for planning to avoid probate litigation and the attorneys at Halcomb Singler would be happy to discuss these strategies with you should you wish to schedule a consultation.