There Are Alternatives to Disinheriting a Child

Some people choose to leave their children out of their estate plan because they believe they've given them more than enough advantages and financial help to become thriving, self-sufficient adults. Billionaires Warren Buffett and Bill and Melinda Gates, for example, are leaving relatively small portions of their wealth to their children and the majority to nonprofit organizations.

However, some people feel that their children will not be responsible with the money, given their history with money or their current behavior or problems. They may be concerned that their kids will quickly blow the money they've worked so hard for on frivolous items and be left with nothing.

When children have substance abuse issues, parents may rightfully be concerned that their child won't have the capacity to use the inheritance wisely. They could, in fact, use it to feed an already-dangerous addiction.

The same reasons may apply for deciding to disinherit a grandchild, niece or nephew or other close younger family member.

The decision to leave (or take) a child or other family member out of your estate plan is a big one, and often made for emotional reasons. Estate planning professionals point out that there are better alternatives to disinheritance. These alternatives can help ensure that the money won't be disbursed to the heir except as you designate, but they aren't as final as complete disinheritance.

You can set up a trust for the child with instructions for the trustee detailing the conditions under which the assets can be disbursed. For example, you can require that a child complete college, get a job and be self-supporting. If a child has a substance abuse problem, you can require that he or she completes a recovery program and stays sober. It's essential to choose a trustee who will be responsible in adhering to the conditions you set.

Another option is to leave a child out of the estate plan, and set up a trust with another family member as the beneficiary, but with the power of appointment to "re-inherit" the child.

This last option can get sticky, depending on what your family dynamics are. Giving another child the power to re-inherit a sibling (or not) may not be wise. What is wise is to discuss the situation and your concerns with your Maryland family law attorney to determine what your legal options are and arrive at the right solution for your family.

Source: The Balance, "Factors to Consider Before Disinheriting a Child," Julie Garber, accessed Feb. 27, 2018

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