It’s best to think twice before disinheriting a loved one

By Mark F. Winn CONTRIBUTOR

Please think twice before disinheriting a loved one. It’s a mistake to disinherit a child only because (1) you cannot stand their spouse (your in-law); (2) they are having financial difficulty; (3) they are incapable of managing finances; or (4) they are being supported by a governmental program.

For instance, let us assume Francine, a widow, has five children – Lucy, Grace, Janice, Marvin and Bob.

Lucy is married to Frank. Francine has never liked or trusted him. Should Francine disinherit Lucy only because she does not like Frank? Not if that is the only reason.

Francine could leave Lucy’s share in a trust to be used for her benefit. If that trust were drawn properly, Francine could make sure that Frank will not directly benefit and that Lucy would not easily squander the money.

Francine could also make sure that if Frank and Lucy got divorced, Frank would get none of Francine’s money. In addition, Francine could direct that when Lucy passes, what funds remain in Lucy’s trust shall be given to her son, in trust, for his education. Result: It never really benefits Frank.

Grace is about to file for bankruptcy and she owes $250,000 to creditors. Should Francine disinherit Grace because she has creditors?

She could, or she could leave her share in a trust for Grace’s benefit. Could Grace’s creditors take the money? Not if the trust were drawn properly.

Janice can’t handle money. She is a spendthrift. Should Francine disinherit Janice because she spends unwisely?

She could, or she could direct her share to be held in a trust for Janice’s benefit. Francine could create incentives so if Janice was gainfully employed, Francine could direct funds be disbursed to match her income.

Better yet, Francine could direct that if Janice was gainfully employed and was maximizing her retirement contributions, then the trust would disburse funds equal to Janice’s pay. There are many possibilities that can help Janice, and they should be explored with guidance from a professional with training and experience.

Marvin and Bob have disabilities and are currently benefitting from government programs. Should Francine disinherit Marvin and Bob in order to make sure they will not lose their government benefits?

She could, or she could leave their share in a supplemental needs trust. If the trust were drawn properly, it could provide funds for Marvin and Bob to supplement the benefits they are receiving.

In other words, if assets are left “in trust” (a special needs trust or supplemental needs trust) this can prevent your loved one from becoming ineligible for the benefits they get from the government.

It is difficult enough to think about these things, but we all know they are important. In all events, you should seek professional guidance in matters relative to your family property. Using trusts to shape and define beneficial interests and control use of funds and create remainder interests can provide tremendous benefits for your family.

Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney. mwinnesq.com