Caterpillar Employees:Disinheriting an Heir

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For Caterpillar employees, clearly stating your intent in a will - including disinheritance clauses - can avoid future disputes and ensure your estate is distributed as you wish,' said Kevin Landis, of The Retirement Group, a division of Wealth Enhancement Group.

'Caterpillar employees should consider the legal implications of disinheritance and possibly add a disinheritance clause to their will to avoid unnecessary claims,' said Paul Bergeron, representing the Retirement Group, a division of Wealth Enhancement Group.

In this article, we will discuss:

1. What is disinheritance and why people might want to consider it.

2. How to disinherit someone - legal strategies.

3. Alternatives to disinheritance include inheritance trusts.

What Is It?

This happens if you fail to leave property in your will to someone who would have received some of your estate had you died intestate. Although disinheriting an heir brings to mind family feuds over who gets the family fortune, there are other reasons you might not want to leave property to a relative. Sometimes your second spouse is financially secure enough that you want to support your children from an earlier union.

Maybe one child is a successful doctor and the other is a single parent barely scraping by, or perhaps you are at odds with a relative and do not want to leave them anything. No matter why our Caterpillar clients are considering disinheriting an heir, there are steps you can take to ensure their wishes are carried out at their death.

Tip: If a beneficiary has trouble with creditors, consider disinheritance. Because creditors cannot take what the successor does not own, an heir cannot disinherit it.

But How Do You Disinherit Someone?

In General

Though omitting a non-heir from your will is easy enough, these Caterpillar customers know the rules are more complicated for your successors. Excluding a child's or spouse's name from a will does not automatically disinherit him or her - and may even promote will contests. In a will contest the disinherited heir might argue that he or she was not included or overlooked. Your state's law regarding an omitted spouse or child may partly determine the outcome of a will contest.

These Caterpillar employees should probably add a disinheritance clause to their wills to make sure they mean to disinherit an heir clearly. This can prevent the disinherited heir from contesting your will because you left him or her out in error. In this clause you would specify the name of the heir you wish to disinherit and the reason he or she is not included: disinheritance. An example of a clause for disinheritance is:

Example(s): 'I do not leave anything to my son John Doe in this will because he is provided for already.'

These Caterpillar employees should consult an attorney before disinheriting an heir.

Tip: Include no reason in your will for disinheriting a beneficiary. An especially negative explanation may give your heir cause to challenge your estate for libel. Leave a separate written statement with your executor if you need to explain the disinheritance to an heir.

Disinheriting a Spouse

In General

You cannot absolutely disinherit your spouse in most states. You live in a community property state and your spouse owns one-half of the community property - which is typically any assets you both acquire during the marriage - if you have one. In all states, spouses are not disinherited since they may claim their statutory share. No matter what the provisions of a will provide, a statutory share may be one-fourth or one-half of an estate.

Example(s): Bob left his USD 1 million worth of property to his secretary, Paula, but nothing to his wife of 30 years, Sharon. Should Sharon want no inheritance, the court will uphold Bob's will. Sharon can contest the will by claiming her statutory share of between a quarter and a half of the USD 1 million Bob left to Paula. Whatever remains after Sharon gets her legal share, Paula will get whatever is left.

Pretermitted Spouse

A pretermitted spousal statute benefits the surviving spouse of a marriage the testator did not foresee at the time of the will execution. In many jurisdictions, marriage revokes a will, and the testator's property passes through intestacy instead of through a will drawn before marriage. In states where marriage does not revoke a will, the law usually provides that the pretermitted spouse receives the amount that he or she would have received had the testator died intestate. However, a surviving spouse may not take under the pretermitted spouse statute if the following conditions are met:

Evidently, it was written in anticipation of the testator marrying the surviving spouse (as it says in the will). The will indicates that it intends to be valid even if the testator later marries.

A spouse was specified by the testator outside of the will in order that the transfer would be in lieu of a testamentary provision as shown by the testator's statements or inferred from the transfer amount.

Example(s): John makes a will before he marries Joan. Assume that they live in a state where marriage is not void in a will. John dies without adding Joan to his will. Joan could say she is a pretermitted spouse because John did not intend to marry her in his will. Joan, a pretermitted spouse, would have received the same inheritance had John died intestate (without a will). Whenever Joan sues John to stop his will from being effective, however, the court may rule Joan is not a pretermitted spouse if John's will contains a clause stating John intends the will be effective regardless of any subsequent marriage.

Tip: These clauses are sometimes considered against public policy.

Tip: The Uniform Probate Code, law in some states but not all, includes additional information for Caterpillar employees.

Disinheriting a Child

In General

Laws that confer some inheritance rights on minors and exempt children of any age from incidental disinheritance severely limit your ability to disinherit a child. Suppose a juvenile claims to be a pretermitted child in the event of accidental disinheritance. Some states allow only children born or adopted after the will's execution to inherit (take) as pretermitted children. Other states consider a child born or adopted before or after the will's execution a pretermitted child. In either event, the pretermitted child generally receives the same inheritance as if the decedent had died intestate.

Example(s): State X resident John has a son, Jack. John executes a will that leaves Jack nothing. State X lets pretermitted children be born or adopted only after the will has been executed. When John dies, Jack claims that he was left out of John's will accidentally and that he would like to be adopted as John's child. But as Jack was born before the will was executed, he is not a pretermitted child.

Example(s): Another example: John in State Y has a son, Jack. John executes a will that leaves Jack nothing. State Y allows pretermitted children to be born or adopted before or after the execution of a will. When John dies, Jack claims that he was left out of John's will accidentally and that he would like to be adopted as John's child. Though Jack was born before the will was executed, he can inherit as a pretermitted child. He gets the same inheritance as if John died intestate.

Alternatives to Disinheritance?

Rather than disinherit someone because you fear they will waste their inheritance, you might leave them an inheritance trust. Your bequest in an inheritance trust passes to the trustee upon your death. The trustee then distributes the income to the beneficiary. Perhaps even a motivation clause is included in the trust document. Dieser provision allows the trustee to terminate the trust and pay the beneficiary their share of the inheritance when the beneficiary can show the trustee that he or she no longer has problems with money management.

Revision of Your Will - Disinheritance Clause.

In General

Revision of a will can involve adding a codicil that revokes part of it or adds a provision. A new will may be as simple - writing a codicil, having it dated, signed and witnessed - as it was then. Remind those Caterpillar employees that to execute a new will, you must revoke your old one first. You do this by writing this clause in your new will:

Articles you may find interesting:

Example(s): I revoke all previous wills and codicils.

It is a complicated process to disinherit an heir - one that requires legal advice and consideration. Consider also how disinheritance could result in the inheritance falling into the hands of the disinherited heir's creditors. Disinheriting an heir prevents creditors from claiming their inheritance because creditors cannot take assets the disinherited person cannot legally own. It can be a critical issue for Caterpillar employees and retirees worried about the future viability of their heirs. They can protect the intended distribution of their assets and have their wishes carried out upon death by disinheriting an heir. (Source: Published April 9, 2021 in Investopedia.)

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