Accidentally Disinheriting Family Members
This edition of the Koldin Law Center E-Newsletter continues a series going “Back to the Basics” to meet your estate planning objectives.
All prior newsletters are saved on our website. You can read them by clicking here.
In the previous newsletters, we discussed (1) having a Will and (2) using methods to avoid probate, as part of your basic estate planning.
Your Will, also referred to as a Last Will and Testament, is a legal document that expresses your wishes about how you would like your assets distributed after you die.
While the goal is often to minimize or avoid probate, you must be careful not to accidentally override your intended estate distribution.
In the previous newsletter in this series we discussed various ways to avoid probate such as (1) adding joint owners to your accounts or real property and (2) designating beneficiaries on your accounts.
In this newsletter we discuss how these probate avoidance methods can cause you to accidentally fully or partially disinherit family members.
Example:
Tom Jones has total savings of $125,000 and has a Will that leaves $5,000 to each of his 4 grandchildren and the balance to his 3 children equally.
Tom has $25,000 in a joint bank account with his son, Mike. Tom put Mike’s name on the account so that Mike could help him pay his bills.
Tom has a brokerage account with $100,000 naming his 3 children as beneficiaries titled “Tom Jones TOD Mary Jones, Mike Jones, Peter Jones.”
Tom lives in an apartment and doesn’t own any other assets.
Discussion:
Based on Tom’s Will, his intent is for a total of $20,000 to be distributed to his 4 grandchildren and $105,000 to be divided among his 3 children. His Will has become ineffective. No assets are going to pass through Tom’s Will.
Toms’ son, Mike is going to inherit the $20,000 bank account because he is a joint owner.
Mary, Mike and Peter are going to inherit the brokerage account because they are designated as beneficiaries on the account.
The grandchildren are going to inherit nothing.
The grandchildren are unintentionally disinherited despite Tom’s stated intent in his Will because no assets are passing through the Will. Tom’s Will has become an empty promise to the grandchildren and Mike is receiving $20,000 more than his other two children because of the Joint Account.
While most people wish to avoid probate, it is important not to create new problems by making promises in a Will that can’t be fulfilled. Extra caution is also needed when using Joint Accounts or naming beneficiaries on financial accounts.
A general practice attorney would most likely prepare Tom’s Will without further discussion and believe he/she is carrying out Tom’s wishes.
The attorneys at the Koldin Law Center, P.C. typically spend a great deal of time discussing how accounts are titled and whether the Will is being overridden by accounts having direct beneficiaries.
Use of Living Trusts
One solution to avoid probate and make sure all beneficiaries are covered is for Tom to establish either a Revocable Trust or Irrevocable Trust.
Instead of making accounts joint or designating beneficiaries on the accounts, he could title the bank and brokerage accounts in the name of his Trust and then designate his beneficiaries in the Trust document. Now, the grandchildren will receive their $20,000, the 3 children will inherit the balance equally, and probate will be avoided.
Both Revocable and Irrevocable Trusts avoid or minimize probate for real estate. Irrevocable Trusts can also protect your assets from the costs of long-term care. For a complete discussion of Trust planning, see our website by clicking here.
For more information about a Last Will and Testament, please visit our website by clicking here.
Next Newsletter–2nd Marriages
The next newsletter will review how second marriages create complexity to your estate planning which can cause your children and grandchildren to become unintentionally disinherited.
How We Can Help
The Koldin Law Center, P.C., located in East Syracuse, New York, has over 50 years of experience helping individuals and families navigate elder law, estate planning, and Medicaid planning.
Our practice is limited exclusively to Elder Law, including:
- Medicaid planning and applications
- Asset protection strategies
- Wills, Powers of Attorney, and Health Care Proxies
- Revocable and Irrevocable Trust planning
When we handle a Medicaid case, we do more than submit the application—we review strategies to protect assets both before and after Medicaid eligibility is established.
We offer no-fee initial consultations, and we welcome the participation of adult children, attorneys, accountants, and financial advisors.
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We have been told by many clients who are in a crisis that they wish they had known about our firm much sooner. We are proud of the many families we have helped in times of crisis.
We are also proud of the many families we helped avoid financial crisis by doing estate planning in advance.
We all share the responsibility for making our family and friends aware of the planning options available to them.
Your referral to the Koldin Law Center could make a major difference in the lives of your family and friends if they are someday faced with a long term illness.
Remember that the Koldin Law Center offers many services for clients of all ages. Our services range from basic estate planning such as a simple will to complex estate planning including asset preservation planning.
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