Two Common Disinheritance Mistakes That Can Lead to Costly Legal Challenges

Situations where you simply do not want to give an individual an inheritance (other reasons for disinheritance are covered in this post) require careful planning, otherwise the disinheritance could lead to litigation if it is not drafted properly.

The two most common planning mistakes I see regarding disinheritance are (1) not naming the person in your documents or (2) naming the person and giving them a token gift.

Mistake One, Leaving the Person Out of Your Estate Documents Entirely

Not naming the person in your documents may be an option if they otherwise have no claim to your assets or are not closely related to you.

Under the law in DC and VA (and likely most jurisdictions), if a child is not named in the documents, then the assumption is you simply forgot and the unnamed child is entitled to either the same share going to the other children or an intestate amount.

You can absolutely disinherit a child (or other individuals), but they must be properly identified in the documents and disinheritance language included as applicable.

For other individuals, not naming them may be an option, but again, depending on the relationship and also the individual in question, it is worth discussing your plans with an attorney to determine the best method for disinheritance.

Mistake Two, Leaving a Token Gift Without a Properly Structured No Contest Clause

Giving someone a token gift can be even more problematic because it would entitle them to be notified about your death, existence of the will or trust, and also information regarding assets and distributions.

The idea behind giving a token gift is to also have a “no contest clause.” A no contest clause says if you contest the estate document, then you lose any potential gift/inheritance.

This certainly is a strategy that can help to mitigate the risk of litigation, but it requires careful planning to ensure the gift and “no contest clause” are structured in a manner to accomplish the goal of having the individual not contest the document.

The main consideration here is how much to gift the individual, generally, a nominal gift is not enough to dissuade someone from contesting.

For example, if an individual who is entitled under default law to inherit 50% is given $1 or even $5,000 in a Will/Trust, and your estate is over $700,000, then they don’t have much incentive to not contest because all they lose is $1/$5,000 and could potentially inherit $350,000.

The exact amount to gift would depend on the size of the estate, default law, and specifics regarding the individual. Essentially, the discussion would be if a gift/no consent clause is the best avenue and what amount the gift should be, or if full disinheritance is a better option.

You and your attorney should also discuss other ways to ensure assets pass in accordance with your wishes while limiting the potential for litigation (e.g. beneficiary designation, joint ownership, trust, etc.).

Talk With an Estate Planning Attorney Before Finalizing a Disinheritance Strategy

If you are interested in discussing potential options for disinheritance or other estate planning matters, please contact us for a consultation.