Inheritance, Disinheritance, and the Problems With Trying to Create a “Fair” Estate Plan

People can feel a lot of guilt about their estate plans, especially if they know their choices are likely to cause conflict among their relatives. To try and avoid conflict, parents who have multiple adult children may simply choose to divide their assets evenly, or they may disinherit one child and wait until the will is read to break the bad news. Unfortunately, trying to avoid conflict while creating your estate plan could end up causing a bigger dispute than you ever imagined.

The Difference Between Fair and Equal for Your Heirs

People may assume that splitting their estate equally between heirs, or leaving everything to a sole heir, will make things as easy as possible for their relatives after they pass. However, there is a big difference between saying, “I want it split equally” and “I don’t want people to fight.” For example, leaving the same amount to an heir who does not need your resources as you leave to one who is struggling may seem fair to you, but it will have a very different impact on each of their lives. It’s important to remember that, through the power of your estate plan, you have complete control to choose who, how much, and when your assets will be distributed.

If you’re updating your estate plan in later life, you may have a wide variety of relatives who could potentially inherit a portion of your estate. You may be on good terms with an ex-spouse, have several grandchildren, or want to leave the bulk of your estate to a charitable foundation. The important thing you must realize is that there is no law that says you have to split your property equally—in fact, it may be better for you and your heirs if you don’t.

Case Story 1: Splitting the Irreplaceable Object

Many estates involve precious family heirlooms, such as antiques, artwork, or jewelry. Consider what could happen if Mom passes away, leaving three adult children. One child wants Mom’s engagement ring. The only other assets are Mom’s house and a modest bank account balance. What is the best way to split the estate among the three children?

This example highlights the importance of using specific language in an estate plan about who will inherit jewelry, firearms, paintings, and other collectibles. Mom may avoid problems by explicitly stating who will get the ring (helping to avoid litigation) and explaining how it will affect the rest of her heirs (guiding the probate attorney to follow her true wishes).

Case Story 2: Disinheriting Peter to Pay Paul

Disinheritance isn’t always a malicious act; it can be a useful tool to provide for family members who need your help the most. Recently, a married couple came in to do their estate plan. They had two children who were in completely different income brackets. The son was earning a high income working for a computer software company while the daughter was still trying to find her way. As their main concern was providing for their current and future grandchildren, they chose an unequal estate plan that benefits the daughter more than the son—not because they love him less, but because he has more resources.

Some clients may disinherit certain relatives in order to protect those relatives from losing their inheritances before they come of age. For example, a divorced parent of a minor child may deliberately “disinherit” the child by creating an irrevocable trust that eliminates the ex-spouse’s ability to participate in the decision-making related to the assets, so that the ex-spouse does not get control of the money. Once the child turns 18, the estate plan should be updated to restore the child’s ability to participate. In order for this to take effect, it must be absolutely clear that the disinheritance is intentional with language such as “I have a relative named X who is being deliberately disinherited.”

Case Story 3: The High Price of Failing to Update a Plan

Without regularly reviewing and updating your estate plan, it can be easy to overlook important people. You can inadvertently cause problems by failing to update beneficiary designations and titles to property after a separation or other life changes. One of my friends has been in a long-term relationship with his partner but is still technically married to his first spouse. If my friend passed away tomorrow, his partner will not benefit at all from his will and could even lose the home they share together. Under Florida Homestead Laws, the house would belong to his surviving spouse or his surviving children.

More problems arise if there are gaps in an estate plan, and the beneficiaries are unwilling to work together. One case I saw involved three siblings who could barely agree on the day of the week, let alone the terms of their inheritances. In 2018, their mother passed away, leaving more than enough assets for each of them to live comfortably. Instead of compromising, the case has lingered in court, and only the proceeds of life insurance remain. The rest has gone to attorney fees and court costs—and by the time it’s over, there will be very little left to inherit.

You Tell Us Your Goals, and We’ll Find the Best Way to Achieve Them

Your estate plan isn’t just about what you have; it’s about what you want and the legacy you want to leave behind. At Yolofsky Law, our trusted advisors listen carefully to your goals and advise you on the best way to make them a reality. Call our office today to get your estate planning questions answered.