It’s the unfortunate, but common reality that not all families get along.
For the purposes of this article, we’re focusing on children and problems that can arise with certain children in your life where the parent-child relationship is strained or estranged. Whether problems with one or more of your children arises from personality conflicts, political or cultural differences, drug or alcohol abuse, love addictions or ongoing untreated mental illness some clients make the difficult decision to curtail gifts or remove an affected child as a benefactor of their estate. While these situations are invariably sad for family harmony, these situations are more common than the public realizes; however, there are several strategies for dealing with an estranged child in your estate plan. In contrast, this article does not address estate planning strategies for children who have certain involuntary conditions, whether mental or physical, that may be able to benefit from strategies that ensure they do not become ineligible for legitimate public benefits.
Irrespective of the reasons for the estrangement, the following are some common approaches for customizing your estate plan to reflect methods to deal with an estranged or troubled child in your estate plan:
Outright disinheritance. If you have come to the conclusions that your relationship with you child and/or children is permanent and beyond repair, you can legally disinherit the child through provisions in your estate plan. Commonly, if you are leaving a child nothing, their disinheritance needs to be specifically mention the specific child in the will or trust and state in no uncertain terms that you are disinheriting him or her; failing to do so could make it easier for him or her to challenge the will. (It is also recommended that you specify whether you are disinheriting that child’s descendants if the estrangement from the children extends to their children or other descendants.)
However, disinheriting a child comes with a risk: First, on a personal level this may cause substantial harm among other child who were included, and may result in lifelong severance of family relationships. Second, from a legal perspective, the affect child or children may sue to contest the validity of the will or trust in court, which can cost your estate time, heartache and money. There are steps you can take to try preventing a will contest, including making sure your will or trust is properly executed, perhaps writing a letter to the estranged child to explain your reasoning, and removing any appearance of undue influence by third parties. Granted, there is no guarantee that this will persuade a scorned child from pursuing legal recourse, but awareness of these issues and consultation with a qualified attorney can help to mitigate these issue to the maximum extent possible. Irrespective, while some children may be indifferent, it should be expected that a disinherited child will experience common human emotions, often similar to stages of grief - but in my experience, most likely anger
Smaller inheritance. If you don’t want to disinherit your child entirely or wish to make it less likely the estranged child will contest the will or trust, you may want to leave them an inheritance that is unequal when compared to other beneficiaries. Leaving a child a reduced inheritance may influence a child to avoid contesting the estate plan, especially if you include a no-contest clause (also called an “in terrorem clause”) in the estate plan. A classic no-contest clause provides that if an heir challenges the will and loses, then he or she will get nothing rather than the amount gifted. Ideally, it is smart to leave the heir enough so that a challenge is not worth the risk and costs of litigation versus the complete loss of the inheritance.
Notwithstanding these clauses, several states, Arizona and California included, have provided the ability to contest these clauses so long as the child has “probable cause'“ to do so - however, the intent of the inclusion of these clauses is to dissuade (i.e. scare) dissatisfied children from attempting to contest a will or trust by putting their inheritance at risk if they indeed do not have probable cause to contest the terms of the estate plan.
Put the inheritance in a restrictive trust. If the reason you do not want to leave your child an inheritance is because you are worried about how they will use the money, you can leave the child’s inheritance in an irrevocable trust managed by a third party trustee that will have unlimited discretion to make distributions as they see fit rather than allowing the child themselves to make distributions decisions. Additionally, you can provide suggestions to the trustee on when and how the trustee should disburse the funds in the trust, or make such distributions contingent upon certain achievements being met by the child. More simply, you can instruct the trustee to disburse the money in small increments or only if the child meets certain conditions, like staying drug or alcohol-free or obtaining and maintaining a full-time job.
Figuring out how to treat an estranged child in your estate plan is complicated and emotional. As Leo Tolstoy wrote in Anna Karenina, "Happy families are all alike; every unhappy family is unhappy in its own way." If this sounds like an issue present in your family, don’t hesitate to call Ganser Law Offices at (480) 930-5859 to discuss.