Disinheriting a Child from Your Plan from Austin Estate Planning Attorney Liz Nielsen

Disinheriting a Child From Your Plan by Austin estate planning lawyer Liz Nielsen

One common storyline in Hollywood movies is the rich father disinheriting the family outcast. The story usually traces a child’s attempts to win their family back. But can fiction imitate reality? Can you actually disinherit a child? In most circumstances, the answer is yes you can disinherit a child in most states.  However, you must understand the limitations and additional factors if you are considering this option.

Even though you can disinherit a child, the law does not allow parents to disinherit their minor children. The only exception to this rule exists in Louisiana (with certain limitations). In other states, including Texas, you cannot effectively disinherit a child until they reach the age of majority (which in Texas is age 18).

Why Consider Disinheriting a Child?

People consider disinheriting a child for various reasons. A parent may have an estranged relationship with a child that causes the parent to consider not passing on money or property to that child. Another instance where a parent may consider disinheriting a child is if the parent is worried that the adult child will misuse a future inheritance, especially if the child has squandered the wealth provided thus far.  Conversely, a parent may also consider disinheriting an adult child if the adult child has accumulated sufficient wealth and does not need additional wealth from the parent.

Regardless of the reasons for disinheriting a child, it is typically a bad idea to use disinheritance as a tool to manipulate a descendant or other beneficiary. For one, a disinherited child may be extremely disappointed or angry on losing an inheritance and cause turmoil within the family. The child could, in turn, attempt to challenge the validity of your estate planning documents. A challenge to your will or other important documents could result in a court proceeding that could delay the rest of your family’s access to their rightful inheritances.

A no-contest clause, also known as an in terrorem clause, can help avoid challenges to a will. The clause permits individuals to challenge the validity of a will or trust.  Furthermore, it requires that if the challenge is lost, the challenger will not receive his or her share of the inheritance. This clause is helpful, but it is not available in all states. For example, Florida law does not recognize no-content clauses in both wills and trusts.  While Texas law recognizes and strictly construes no contest clauses, the law also recognizes instances they are also rarely enforced.  With these potential problems, it is important to explore alternatives for you and your family.

Alternatives to Disinheriting a Child

As a parent, you have multiple options for how you transfer your wealth. One option is to structure your estate plan to grant your child a minimal amount. Leaving something small makes it more difficult for a child to argue that you purposefully disinherited them. Providing a small amount can serve as proof that there was the intent to leave something to the child. In addition, providing a small amount to your child under a will or trust may discourage a legal challenge because your child will lose something if their challenge is unsuccessful. If your child is to receive nothing and loses the challenge, they are still in the same position they were before.

Another option for distributing your money and property is to hold the money and property in a protected trust, with a trusted person or entity serving as the trustee, and provide small amounts to the child over time. You can tie these distributions to your child’s age or particular achievements, such as graduating from college or staying away from alcohol or drugs for a designated time. You can provide these incentive-based payouts for the child you still want to support but who has given you cause for concern about their use of the funds.

Finally, you can create a trust, appoint a trusted person or company as the trustee, and allow the trustee to use their discretion as to how and when the money and property will be used for your child. Your trustee can be a person who has proven that they can handle the responsibility of managing the assets without succumbing to pressure from your children or the temptation to misuse the funds. These options provide alternatives that allow you to control how you distribute funds to your child. However, if these options do not adequately address your situation, you can still disinherit your adult child.

How to Disinherit a Child

First, you must document your intentions to disinherit in your estate planning documents.  If don’t adequately document a disinheritance, the individual could receive a share by default. Consequently, any property not distributed using proper estate planning methods, will be distributed according to the state’s laws.

You cannot merely omit your child’s name in your estate planning documents.  Rather, you need to prepare estate planning documents that explicitly disinherit your child.  Otherwise, the disinherited child can challenge the validity of your documents and claim that it was an accidental omission.

We Can Help

Decisions regarding how you want to pass your money and property to your children can be tough.  But it is more difficult to ensure that your desires are legally carried out. You do not need to face those challenges by yourself, however. We have a team of experienced attorneys dedicated to helping people like you protect your legacy and your loved ones. If you need assistance with your estate planning, call our office to schedule a meeting today.

Give Us a Call

Nielsen Law PLLC provides family focused estate planning to individuals and families in Austin, Round Rock, Cedar Park, and the Central Texas area.  For more information and to learn about our firm, please contact us.