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4 Strategies in Estate Planning for an Estranged Child – You Can’t Choose Your Family – the Days of Beaver Cleaver Are Over

4 Strategies in Estate Planning for an Estranged Child – You Can’t Choose Your Family – the Days of Beaver Cleaver Are Over

It is not unusual for a parent to become estranged from a child. So, often parents consider different ways to handle their estate planning for the benefit or detriment of the estranged child. Some of the many reasons that I have been told include:

(1) the parents get divorced and the child no longer talks with one of the divorced parents; (2) the child was born of a prior relationship; (3) the adult child is being unduly influenced by his or her spouse; (4) the child has an addiction; (5) the parent and child have political differences; (6) the child never calls the parent; (7) the child doesn’t give care to the parent when needed; (8) the child and parent simply do not get along; (9) the child has a tattoo; (10) the child married someone of the same sex, a different religion, or a different race; (11) the child is disabled; (12) the child is being sued or has creditor issues; and (13) the child is a spendthrift. The following are 4 ways to deal with an estranged child in the parent’s estate planning:

  1. Beneficiary designation – A parent could designate whomever they want through beneficiary designation, (i.e., paid on death bank accounts, transfer on death investment accounts, etc.). So, they can either disinherit by having others as the beneficiaries of accounts or they can have some accounts with a smaller amount to the estranged beneficiary. It should be mentioned that beneficiary designations fail to address if something happens to the beneficiary (premature death, disability, marital issues, creditor issues, etc.) that can be easily planned for in a will or trust.
  2. Disinheritance by will or trust – The parent could specifically state in the will that a child is disinherited as there is no forced heirship (requirement that a child be a beneficiary) in almost every state (other than Louisiana). However, there should be a no-contest provision in your will or trust to reduce risk of a contest. Nonetheless, this does not eliminate the risk of a contest. Challenges for lack of capacity and undue influence are often made.
  3. Give enough to child to encourage to reduce risk – If you have a “no-contest” clause in your will or trust, the estranged child may feel like they have nothing to lose by contesting. As a result, some parents may give a certain amount so that the estranged child has to gamble that they could lose the amount given in the will or trust by contesting. See the article “Pride and Prejudice” (Charley Pride article) by clicking here.
  4. Trust for beneficiary – If the child has creditor issues or is influenced by others or is a spendthrift or an addict, you can draft terms and conditions or even incentives on how funds can be distributed to the beneficiary by creating a trust within your will or trust. For example, the child can only get a certain amount annually or monthly (dollar amount or percentage) or there can be incentives for education, meeting financial goals, or being free from an addiction.

As one parent mentioned, “instead of wiping away your tears, wipe away the people who made you cry”.

If interested in learning more about this article or other estate planning, Medicaid and public benefits planning, probate, etc., attend one of our free upcoming Estate Planning Essentials workshops by clicking here or calling 214-720-0102. We make it simple to attend and it is without obligation.