Fair and equal are not always the same thing
By James Miskell, Attorney at Law
When people think about dividing their assets among their loved ones when they die, they very often take for granted that anything that they leave as an inheritance will be divided equally among their children. While this makes sense, it is not the right result in all situations. Estate planning is personal to each family’s situation and the disposition of the estate should reflect the wishes of the giver--whether anyone inside or outside the family would agree.
In many situations, it is easy to split up assets like pieces of a pie--with an equal piece for everyone. However, in some instances, the assets in the estate are not amenable to an even split or there may be reasons to distribute things unequally.
After a lifetime of rearing children, parents may want to level the playing field out of a sense of fairness. Whether making adjustments for lifetime “loans,” providing for the supplemental needs of a disabled child dependent upon government benefits, helping children who were less successful financially than their siblings, or protecting an inheritance from a squandering prodigal, the reasons for unequal inheritances are as unique as families themselves.
In situations where unequal inheritances are called for, heirs and beneficiaries receiving less than others may feel spurned or sense favoritism. A will challenged by an unhappy heir or beneficiary means that your planning may end up ruined by lengthy probate court litigation. What can you do?
If you are worried that disappointed heirs could contest your will or trust after you die, one option is to include a "no-contest clause" in your estate planning documents. Because trusts do not require probate, they are less susceptible to challenge than wills; however, both wills and trusts can include no-contest language. A no-contest clause provides that if a beneficiary challenges the will or trust and loses, then he or she will get nothing.
Essentially, a no-contest clause means that any heir who challenges your estate plan is immediately disqualified from any inheritance from it. Because a person inheriting nothing has nothing to lose from a challenge, the clause is most effective when a would-be challenger is set to receive some benefit. Consequently, the beneficiary has to decide if he is willing to trade that bequest for the privilege of complaining and getting nothing at all.
The uneven distribution of an estate is always a challenge. When you design an estate plan for your assets you make real your intentions, hopes and dreams for your loved ones. You do not undertake the process of creating your estate plan lightly and it is worth protecting it from attack after you are gone.
How do you split your estate unevenly and still keep the peace in the family or, at the very least, keep it out of the courts? The key is to demonstrate that choices in your planning were deliberately made by YOU. Partnering with an attorney in your planning will reinforce the impression that your decisions have been thoughtfully made. Inheritance and disinheritance are complicated subjects, both legally and emotionally. Should you have a will or trust? Should you include a no contest clause? To be sure that your plan will be effective and to avoid unintended consequences, construct your estate plan with the assistance of a professional, be careful to protect it, keep it current, and keep it within easy reach of the right people once the time comes.
James M. Miskell received his law degree from the University of Georgia in 1993. His Asset Protection and Estate Planning Law practice is located in Lawrenceville, Georgia. He offers free educational workshops and consultations to assist clients as well as fellow professionals in creating individualized solutions.