Should You Disinherit Your Child?

Older Mother on Couch Considers Disinheriting SonIf you are reading this article, it is likely that the question of whether to disinherit a child has been troubling you. Many considerations go into the question of whether you should disinherit your child. Perhaps your child has developed a drug or gambling problem, and you fear that leaving them money would simply feed their addiction without helping them. Maybe you have been estranged from your child, for whatever reason. Or you may feel that your favorite charity would benefit more from receiving your assets than your child would. If you have a child with special needs, you may be thinking ahead and worrying that inheriting money from you could jeopardize your child’s ability to qualify for government benefits.

Whatever your reasoning, don’t rush into this decision. Unless your intention is to punish your child by withholding their inheritance, there is almost certainly a better way to achieve your aims. And if your intention is to punish your child by disinheriting them, you may want to reconsider.

Why You Shouldn’t Disinherit a Child

One difficult estate planning and probate attorneys see over and over is a family in which children have been treated unequally when it comes to inheritance. The child who received less (or nothing) may have feelings of bitterness toward the deceased parent who favored a sibling or siblings over them. That is sad enough. Even worse is that they are also likely to have feelings of resentment toward their siblings who received more. They may feel that the favored siblings somehow unfairly influenced the parent to leave them more, but even if this is not the case, it is almost impossible for an unequal inheritance not to cause hurt feelings. In the most severe cases, there is a permanent rift between siblings.

You may not care whether your estranged child harbors bitterness toward you after you are gone, but you probably do not want to permanently damage relationships between the family members you leave behind. Consider whether the satisfaction you get from cutting an estranged child out of your estate plan is worth tearing your family apart over, because that may indeed be the price.

Another consideration is that the disinherited child might challenge your will. Even if the challenge is not successful, realize that the cost of the litigation will reduce the assets left in the estate for the heirs you do want to have inherit from you.

Alternatives to Disinheriting Your Child

Assuming we’ve persuaded you not to disinherit your child, what are your options? That depends on what you are trying to achieve. If you have a child with special needs whose assets you want to protect while enabling them to receive needed government benefits, you may want to look into a special needs trust. Such a trust is specifically designed to comply with laws about what assets an individual may have while still being eligible for benefits. In other words, you don’t need to disinherit your child, but you do need to make sure assets for their benefit are held in such a way that they don’t disqualify them from receiving needed aid.

If you are concerned about your child impulsively blowing their inheritance on drugs, gambling, or other unwise life choices, you might look into creating an incentive trust. An incentive trust places assets in the hands of a trustee you choose. The trustee then makes distributions for the benefits of beneficiaries you choose—such as your children. With an incentive trust, distributions are contingent on the beneficiary doing or not doing certain things. For instance, you could arrange to have distributions for college graduation, marriage, remaining clean and sober for a certain period, or whatever milestones you choose. Bear in mind that you cannot set conditions that infringe on a beneficiary’s protected rights, such as requiring that they be a member of a certain religion.

You can use trusts in other ways, too. For instance, you could set up a trust that will pay a child’s rent, education, medical expenses, etc. directly, so that the child’s needs are met but they do not have the ability to waste the funds. You could also create a spendthrift trust to protect a child from their own impulsiveness and from their creditors. With a spendthrift trust, an independent trustee has total discretion as to how distributions from the trust are made. Because your child, the beneficiary, has no control over the assets in the trust, they cannot be reached by a creditor or a divorcing spouse.

If you want to support a charity that is near and dear to your heart, but don’t necessarily want to leave your child or children out in the cold, look into creating a charitable remainder trust, which distributes an annuity to your beneficiaries for a span of years, then gives the remainder of the assets in the trust to a charity.

Disinheriting a child is a serious decision with potentially far-reaching and permanent consequences. Before committing to disinheriting one or more of your children, speak with an experienced Michigan estate-planning attorney. We invite you to contact our law office with any questions you may have about disinheriting an heir.