Honey, I Shrunk the Kids' Inheritance!
I hate to be presumptuous, but I will go ahead and assume that most of my readership is not of the aristocracy. (I will allow that at least one or two of you, despite your ability to afford a much fancier lawyer, have dropped in merely for the dusting of wit along with all the death-talk.) Chances are, you do have some assets, though, and you have worked hard for them. If so, you probably care what happens to these things after you leave the earthly plain.
I once had an elderly friend who hit WAY above my weight class. Let’s call him “Jacob.” Jacob and his wife “Jenny” were Ph.D.’s who had made names for themselves as professors, expert consultants, and chemical company executives. They spent their golden years hobnobbing with other world-famous scientists and enjoying various strategically placed homes scattered around the globe. Because Jacob was not only old but was battling cancer, we would talk about death a lot. We had death in common—it was our “thing.” (The other “thing” between us was his hatred of the delivery drivers who brought the products he ordered from my store.) After a few years, there wasn’t much I didn’t know about Jacob’s eternal plans.
I knew that Jacob and Jenny had no children, so eventually I asked what would happen to all his real estate and other assets when he died. “I have useless nephews. I don’t want them to get any of my stuff. But,” he told me with more than a hint of bitterness, “we don’t have any other heirs, so I suppose the London house will buy one of them a lot of coke.”
Of course, I didn’t know then what I know now, so I had nothing to offer in the way of advice. In fact, Jacob died shortly after I began law school. As it turned out, Jenny outlived him. It fell on her to decide which nieces and nephews were worthy of the couple’s hard-earned assets. I have often wondered whether she shared Jacob’s view of the natural heirs and decided to disinherit the lot of them.
The Art of Disinheritance
At last check, in all but one state (Louisiana), your children had no recognized “right” to inherit from you; however, the laws of intestacy—the rules that courts follow when you die without a will—favor natural and adopted offspring pretty much everywhere. In general, by utilizing a will, you can decide to whom you want to leave your property, and in what proportions.
As lawyers do, I must caution you that each situation is different, and you should consult with your own attorney about your particular circumstances. In a situation like Jenny’s, her omission of nephew Little Johnnie from her list of devisees would not necessarily result in his being left with nothing. Rather, to ensure that her mountain home doesn’t find itself in Johnnie’s possession, she could specifically state that she “intentionally leave[s] nothing to Little Johnnie.” (If I were writing her will, this would be denoted in a separate paragraph titled something like “Disinheritance Provisions.”) If she is concerned about in-fighting among the nephews, she could also leave them each a specific asset so that her bequest is clear. What she should NOT do is fail to mention Little Johnnie at all—because we all have a Little Johnnie in our family, and if anyone is going to throw a wrench in the probate process, it will be that ungrateful little turd.
On the other hand, Jenny might be tempted to show Little Johnnie some conditional love. (“I leave Johnnie my mountain home, but only if he stops snorting the coke.”) The problem here is that most courts do not appreciate conditions like these. Moreover, forcing conditions on a devisee is just begging for a will contest. Yes, your will is your choice; however, your choices need to make sense to the judge who will end up overseeing the probate process. Ideally, they also make sense to everyone named.
All Things Being Equal
Most people who have children will be tempted to leave the bulk of their estates to their kids in equal shares. That is all fine and dandy if your assets are mostly monetary, your kids are best friends, and you have uber-confidence in the rock-solid nature of your family dynamic. But come on, who are we kidding here? Let’s have a show of hands: how many of you are living in a perfect family? *crickets*
The fact is, your Cindy moved half a country away, Marsha leads the local PTA and is married to a real estate tycoon, and Jan knows you don’t even remember her birthday. Does it make sense to leave them all the family home and equal thirds of your investments? Probably not. I guarantee you that Cindy has no interest in the house, Marsha’s is nicer than yours, and Jan wouldn’t know an exchange-traded fund if it bit her in the government bond.
When you sit the girls down to explain your estate plan—and you MUST sit them down, regardless of the whining—you need to explain why you are leaving Jan the house, Marsha the stocks, and Cindy the (non-probate) insurance policy. If you can’t explain it to your family while you are alive, then good luck to your bunch when they try to slog it out in front of a judge later.
If you take away one thing from today’s blog, it should be this: whatever you do about your worldly treasures, be intentional. A bit of careful planning can keep Little Johnnie out of anyone’s hair and Jan feeling like you cared. (LOL JK, Jan is a whiner and no matter what you leave her, it will be the wrong thing. Just do the best you can and pick an executor with excellent people skills.)