Disinheriting

I recently became aware of an online course produced by the University of Wyoming regarding estate planning.  I mentioned that in an earlier blog.  I decided to take the course myself by reading the documents that are on line.  I am not reading them in any particular order.  The first one I chose explains how to omit a child or spouse from inheriting your property.  Here is the link http://www.wyomingextension.org/publications/bulletins-estateplanning.asp  to all the articles.  The individual article regarding disinheriting is found at this link http://www.wyomingextension.org/agpubs/pubs/B1250-7.pdf   

When we die there are certain persons who are considered the natural persons who should inherit our property.  Those people include our spouse and our children.   If we do not want to leave any property to a spouse or a child, this could result in that spouse or child contesting our estate plan in court.  That is why it is important to think about how to omit or disinherit that person form our estate plan.  This article discusses that issue.  All references to the law are to Wyoming law.  The laws of most states are quite similar...but there are differences.  So, before taking action on any of the advice given it is very important to  understand the law in the state where you live and where your will or trust will be administered.  Examples of state to state differences are the division of assets between a surviving spouse and children if there is no will or trust, and the use of terminology such as the term for a person receiving property pursuant to a will in Wyoming is "distributee" while in other states the term is "devisee."

In my opinion the suggestions contained in the article are correct.  My major criticism of the article is that it did not warn the reader to carefully review beneficiary designations for property that is not subject to probate.  Property such as insurance policies and retirement benefits (IRAs, 401Ks, defined pension plans, etc.) are not governed by your will.  So, omitting a person in your will has no affect on those policies or benefits.  In other words, you could pay an attorney thousands of dollars to omit a child from your will and estate plan, but that child would still inherit your insurance policies and retirement benefits if that child was included as a beneficiary in the beneficiary designation for that plan or policy.  So any time you want to adjust your estate plan you should always carefully review the beneficiary designations that control who receives your insurance, annuity, retirement and other similar benefits.  Always remember that those designations are not governed in any way by your will or trust unless so stated in the designations on file with the insurance company or retirement plan administrator.

The author stated that in a Wyoming will you could state that if someone challenges your will they will receive nothing.   This is the Colorado law: 

§ 15-11-517. Penalty clause for contest

A provision in a will purporting to penalize an interested person for contesting the will or instituting other proceedings relating to the estate is unenforceable if probable cause exists for instituting proceedings.

Cite as C.R.S. § 15-11-517

So, in Colorado if you state that in your will that someone takes nothing if they challenge your will that means that if the will challenger can convince a court that they have good reason to challenge then they can still inherit from your estate.  So according to the article, the law in Colorado is different from that of Wyoming regarding will challenges.

If you are interested in disinheriting someone, read the article provided by the University of Wyoming, but keep in mind the minor differences from state to state and BE SURE to review all beneficiary designations as you consider your estate plan.

Posted on January 5, 2014 .