By Lane V. Erickson, Idaho Estate Planning Attorney
It happens more often than you may think. For a variety of reasons I may have a parent discuss with me their options because they don’t want to leave any inheritance to a specific child or to any of their children. Because my goal is to help my clients complete a customized estate plan for them, I talk with them about their options, and also about the reasons they may want to exercise these options. I found that there are usually four main reasons why a parent may not want to leave an inheritance to a child or to their children. We will discuss this in more detail below but I'd like to talk first about the purpose of an estate plan.
I often tell my clients that if I had a crystal ball, I would be the wealthiest estate planning attorney in the world. This is because I'd have the ability to know when each of my clients would pass away. Based on this, I'd have the ability to help them create the perfect estate plan that will meet all of their needs and do exactly what it is they want.
When I tell clients that if I did have a crystal ball to help them with their estate planning I would help them spend their last dime the day before they passed away. The reason for this is that the person's estate, which is all their money, property, and other assets, should be enjoyed by them while they are alive. There is no law or any other requirement that a parent must leave any kind of an inheritance to any child at any time. However, for some strange reason, many parents feel like it is their duty or obligation to do this.
I like to remind my clients that the first priority of estate planning is to protect the individual who creates the estate plan while they are alive. The second priority is to have a plan in place that will provide an organized way of distributing any money, property, or other assets that might still exist in the estate after the individual has passed away.
After taking all this into consideration, There are additional specific reasons why a parent may not want to leave anything to a child even if they do have money or assets in their estate when they pass away. The purpose of this article is to talk about those reasons as a way of helping you think about your own estate planning and the options that you have for each of your children.
Children With AddictionsThe first and one of the biggest reasons you may not want to leave an inheritance to a child is if that child is suffering from addictions. These addictions could be to alcohol, drugs, gambling, sex, or other destructive substances or behaviors.
Parents who have a child who suffers from these types of addictions recognize that if they were to leave money or other property to this child after they die, it would likely be used to support these addictions. In other words, these addictions may be continued or may be made worse by any inheritance the child receives.
Rather than leaving an outright inheritance, parents have an opportunity to create a trust, that can be used to incentivize and help the child with these addictions. Parents can also use such a trust to supplement and support their child without enabling the addictions they have.
Children With DisabilitiesAddictions aren't the only problems that children may suffer from. Children with disabilities, special needs or handicaps, also need to be protected as part of a parent's basic estate plan.
The main reason for this protection is that many of these children are receiving disability benefits from federal, state, or local governmental agencies. The benefits that they receive usually have very strict eligibility requirements that limit the amount of cash and assets the disabled child can possess at any given time. If the child receives more money or assets than they are allowed, they will likely lose these disability benefits, and depending on the timing, may even be required to pay some of those benefits back.
A parent who loves their child who has disabilities, may want to create a supplemental needs trust to receive the inheritance rather than giving the inheritance directly to the disabled child. By doing this, the parent has created a system to allow their child to continue to receive the benefits they have, and to use the estate distribution to the trust to supplement the things their child may still lack.
Nothing from this trust goes directly to your disabled child. Rather, the Trustee uses the assets in the trust to pay for things directly that are then used to help the diabled child. For example, paying rent to the landlord, or the grocery bill to the grocery store, or the utility bill to the provider. The money is never given to the disabled child, but the child receives the benefit from the trust.
Additionally, when your disabled child passes away, the remaining benefits in the trust are to be distributed to a specific person or group of people such as your child surviving siblings, which are your remaining children. They do not go into the estate of the disabled child because the disabled child never owned them.
Children You Have No Relationship WithYet another reason why parents may want to disinherit a child is when they have no relationship with their child. I actually see this happen more often than you may think. For some reason, a rift occurred in the relationship between the parent and their child. As the years go on the rift widens and the lack of communication or interaction creates a wedge between the parent and the child.
I find that when this happens, the parent is more prone to leave their estate to their children that they do have a relationship with and to disinherit the child that they don't. It's important to understand that a parent has the legal ability to disinherit any child anytime they want, for any reason they want. Even if I don't necessarily agree with the reason my client has given, I am willing to help my clients reach their goal.
Great Children That Don’t Need Your EstateThe final reason I find that parents may want to disinherit a child or children is because their children are actually great and are doing really well in their lives. This may mean that they are doing well financially and that they don't really need their parents’ estate.
I will say that I caution parents when they use this as a reason for disinheriting a child. I caution them because I find that this is the least best reason to use for disinheritance.
Even a child who is doing great and may not need your estate financially, will feel slighted or left out if all the inheritance goes to other children who are more needy. I'm not saying that a distribution has to be equal in this circumstance, but rather it's important for parents to acknowledge in their estate planning how well their child is doing, how proud of them that they are, and that they are leaving them something but that it is less because they are less needful than others.
When it is done in the correct way, this can be a wonderful experience for a child. However, if it's not done correctly, it could be devastating to the child, even though they may not need your money or property.
As you can see, there are many reasons why a parent may want to disinherit a child from part of their estate plan. We have helped many parents accomplish this, and we are confident that we can help you too.
Enlist an Idaho Estate Planning Attorney to Help YouOur team of Idaho lawyers can help you with any of your estate planning or probate needs. Whether you are seeking to create or review an estate plan for yourself or would like to help a loved one, we are available to discuss your options and answer your questions at an initial free 30-minute consultation. Call us toll free at 877-232-6101 or 208-232-6101 for a free consultation. You can also email us directly at lane@racineolson.com or stop by our office at 201 East Center Street, Pocatello, Idaho 83201. We will answer your questions and help you solve your Idaho Estate Planning problems.