How to Disinherit a Family Member
Sometimes there may be a family member who you want to make sure does not receive anything from your trust or estate. Perhaps they have enough financial support that they do not need more or perhaps there is a personal rift.
It’s important to know that there are certain people who you cannot disinherit by omitting them from your estate planning documents: a spouse and a minor child. There is a presumption in California that you intend to provide for a spouse and for minor children; therefore, leaving them out of your documents is not sufficient. For spouses, minor children, and (really) everyone else, there are steps you can take to make sure that your wishes to exclude someone are legally binding and not subject to litigation.
What does it mean to disinherit?
Disinheriting means affirmatively excluding relatives from becoming heirs or beneficiaries of your trust or estate. For example, if someone has an estranged parent or child, they may want to disinherit that person.
No one is entitled to receive something from you after you die. However, in certain circumstances, spouses and children are presumed to have been intended beneficiaries. If you die without any estate planning documents OR all your named beneficiaries have predeceased you, then your assets could go to your closest living relatives. (Your closest living relatives are determined by state law and the list starts with your children, then your parents, then your siblings, then your nieces and nephews, then aunts and uncles, then cousins, etc.)
How do I disinherit?
If there is a close family member who is potentially entitled to receive something (a parent, child, sibling), then it is important that the person is explicitly named and acknowledged, and that the person was intentionally excluded as a beneficiary.
What about a token gift?
If you provide a token gift (e.g. $1) then that person becomes a beneficiary. Beneficiaries are afforded rights of notice and due process, regardless of the size of their gift. By learning that they received merely a token gift, they may feel emboldened to file a law suit. Even if their claim ultimately lacks merit, your trustees may feel compelled to settle the suit, since it is often cheaper to settle than to prove the claim lacks merit. If your intention is to EXCLUDE someone, then you probably don’t want them on that list of beneficiaries.
What about a bigger gift?
Sometimes, the best way to “get rid” of potential litigation is to give someone enough that it’s not worth their time to file a lawsuit to try to get more. If you give someone $1, it’s easy to say that they have nothing to lose in filing a suit. If you give someone $1000, it may not be worth it to them.
What about “no contest” clauses?
A no contest clause is a part of a will or trust that says that anyone who contests the document, and fails, won’t receive anything. In California, courts are reticent to lock potential viable claims out of court. So no contest clauses only practically come into play for claims with zero merit on its face. The economics of litigation often result in out of court settlements, even when a claim lacks merit. Although no contest clauses are considered best practices, you do not want to rely on such a clause to prevent future will or trust contests.
So what should you do if you want to leave someone out?
If you decide to disinherit a family member, call us to discuss options for how best to proceed.