The “carrot and stick” motivational approach involves offering a “carrot,” or reward, for compliance, and wielding a “stick” as punishment for undesirable behavior. Generally, the proponent uses this approach to induce others into a desired behavior or lifestyle.
In our more than 40 years of handling estate planning and probate matters, we’ve met some clients who choose to adopt a carrot and stick approach to their legacy. Some people wish to encourage good acts by dangling a carrot in front of their heirs, promising to gift certain property by a Will.
Sadly, we’ve also had clients disinherit loved ones because they disapprove of certain behaviors or life choices.
But, there are sometimes nuanced reasons why one might make the painful decision to disinherit an heir. And, contrary to popular belief, it has nothing to do with punishment.
Why Should I Disinherit?
Sometimes, disinheritance can be born of love. Or strategy. Or mistake.
We have seen loved ones disinherited for all sorts of reasons. A mother might disinherit a son because the child suffers from drug addiction, and she does not want to finance the habit. Sometimes, decedents disinherit family who are incapable of managing money or suffering from mental illness. Recently, we had a case where a decedent disinherited a loved one because she was worried about how the money would affect the beneficiary’s eligibility for government aid.
And, sometimes, disinheritance is accidental. We often see this when a will isn’t updated after a child was born or adopted. Or, when a decedent remarried after his final will.
Who Can I Disinherit?
Despite what you’ve seen in shows or movies, in most states you cannot disinherit whomever you wish. Indeed, your state probably deems some relationships too sacred.
For example, in New York, as in most other states, you cannot entirely disinherit a spouse. You can certainly try, but your spouse would claim a forced elective share. In most cases, that share is one-third of the estate, after any debts have been paid.
Some states, like Florida, even go so far as to prohibit the disinheritance of minor children. And then there is the U.S. territory of Puerto Rico, which imposes a seldom-used rule of forced heirship. The law states that children, grandchildren, direct descendants, and sometimes parents (but, oddly, not spouses) are guaranteed an inheritance, regardless of the will of the deceased.
In New York, you can completely disinherit minor and adult children. But how easy is it?
How Can I Disinherit?
There’s a popular misperception that if you want to disinherit a close relative, leave them a dollar, and they cannot legally challenge the will. This isn’t entirely accurate, though the old wives’ tale does seem to be rooted in a legal principle.
An in terrorem (Latin for “in fear”) clause is a common will provision threatening that if anyone challenges the legality of a will, or any part of it, that person will lose whatever he is entitled to under the will. It is intended to discourage beneficiaries from engaging in litigation after the will maker is gone.
Any lawyer will tell you an in terrorem clause is necessary when disinheriting someone, or unequally distributing assets. And, yes, it’s true that in order for an in terrorem clause to have any teeth, the will maker should leave something to the person they wish to disinherit.
But obviously, no disinherited beneficiary is going to think twice about risking one dollar, or even one thousand dollars, if it means that a successful challenge would result in one-half of a five million dollar estate. So, a more accurate- if less memorable- rule is that if you want to discourage challenges to your will, leave your disfavored child enough money to make it too much of a risk.
Don’t Want to Disinherit? Dangle a Carrot!
You should always consider alternatives to creating complete disinheritance or unequal terms in your will, because both of those options usually lead to hurt feelings. Luckily, a testator can ensure their legacy is used productively by other means.
It turns out, the deceased can control things from the grave. We call it a trust.
A good estate attorney can craft a trust to incentivize desired behaviors. The trust can nominate a trustee to make a certain distributions of trust assets upon achieving certain life milestones. For example, you can provide a specific distribution contingent upon the graduation from college. The trustee might also purchase a car for the beneficiary if he holds a job for a year. Or, she could provide an allowance for housing and food if the beneficiary completes a drug rehabilitation program.
Unlike wills, a trust can also stagger distribution schedules – say, 25% distribution at age 25, 35% at age 30 and the balance at age 35 – so that a beneficiary cannot burn through their inheritance all at once. Finally, certain types of trusts can shelter property and money from certain creditors, if carefully drafted.
The estate planning attorneys at Velella & Basso have years of experience advising clients on how best to provide, or not provide, for their next of kin. Contact us today to discuss your options.
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