t’s a mistake to disinherit a child just because:
- You cannot stand their spouse (your in-law),
- They are having financial difficulty,
- They are incapable of managing finances, or
- They are being supported by a governmental program.
Think twice before disinheriting a loved one.
For instance, let us assume hypothetically that Francine (a widow) has five children: Sue, Marsha, Terry, Greg and Max.
Sue is married to Jack, who Francine has never liked. Should Francine disinherit Sue because she does not like Jack? She could.
She could also leave Sue’s share in a trust to be used for her benefit. If that trust were drawn properly, Francine could make sure that Jack will not directly benefit and that Sue would not easily squander the money.
Francine could also make sure that if Jack and Sue got divorced, Jack would get none of Francine’s money.
In addition, Francine could direct that when Sue passes, what funds remain in Sue’s trust shall be given to her son, in trust, for his education.
Marsha is about to file for bankruptcy, and she owes $250,000 to creditors. Should Francine disinherit Marsha because she has creditors? She could.
She could also leave Martha’s share in a trust for Marsha’s benefit. Could Marsha’s creditors take the money? Not if the trust were drawn properly.
Terry can’t handle money. She is a spendthrift.
Should Francine disinherit Terry because she spends unwisely? She could.
She could also direct her share to be held in a trust for Terry’s benefit. Francine could create incentives so that if Terry was gainfully employed, Francine could direct funds be disbursed to match her income.
Or, better yet, Francine could direct that if Terry was gainfully employed and was maximizing her retirement contributions, then the trust would disburse funds equal to Terry’s pay. The possibilities are endless.
Greg and Max have disabilities and are currently benefiting from government programs. Should Francine disinherit Greg and Max in order to make sure they will not lose their government benefits? She could.
She could also leave their share in a supplemental needs trust. If the trust were drawn properly, it could provide funds for Greg and Max to supplement the benefits they are receiving.
In other words, if assets are left “in trust” (a special needs trust or supplemental needs trust) this can prevent your loved one from becoming ineligible for the benefits they get from the government.
At the same time, you do not need to disinherit them.
It is difficult enough to think about these things, but we all know they are important. In all events, you should seek professional guidance in matters relative to your family property.
Using trusts to shape beneficial interests and control use of funds and remainder interests can provide tremendous benefits for your family.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate planning and elder law attorney. www.mwinnesq.com