One of the strange outcomes of sloppy estate planning work is the case of unintentionally disinherited children. Obviously this isn't something that most of us want to do, as you can ask 100 parents off of the streets whom they want to inherit their estate and all but a handful would answer, "My kids." Unfortunately, many estate plans fail to accommodate this simple wish.
How Disinheritance Happens
The most common way that an unintentional disinheritance occurs is responsible parents draft what is referred to as an 'I love you will'. This is a simple will that essentially says that when one spouse dies, the other will inherit the estate. When the second spouse dies, the estate will then go to the children. Sounds reasonable enough, right?
This is all well and good as long as neither spouse remarries after the other dies. However, many spouses will remarry and draft another 'I love you will', and this creates a major problem. In this second will, children from the first marriage are left out in the cold, as when the second parent dies, the entire estate is passed on to the second spouse and not the children. At that point, it is entirely up to the second spouse as to whether or not the kids will see any money.
Since it is a second marriage, the odds of animosity towards the second marital partner are significantly higher. This means that the chances of an unintentional disinheritance are much greater. To solidify this concept, let's use a hypothetical example.
Example: Matt and Lisa and Jeff
Matt and Lisa were married at the age of 25 and had two children - Jake and Anna. Being responsible parents, Matt and Lisa drafted a simple will that would pass the estate on to the surviving spouse and then on to the kids. Unfortunately, Matt had a heart attack at the age of 42 and died. Lisa inherited the estate and life insurance proceeds.
Lisa, also 42, began dating a couple of years later and fell in love with Jeff.
After dating for two years, they tied the knot at the age of 46. Being responsible adults, they updated their estate plan to reflect their recent marriage and put together another 'I love you will'. Their marriage was strong and everyone was happy.
Shortly after Lisa's 67th birthday, she died. Her estate plan that was drafted more than 20 years earlier was reviewed and executed. Jeff inherited the estate and Lisa's children received nothing. Feeling this wasn't right, Lisa's children, Jake and Anna, contested the will to no avail.
This created animosity and Jeff decided to draw up a new will that eliminated Jake and Anna as beneficiaries. And there you have it: an unintentional disinheritance.
In this post, we examined the concept of an unintentional disinheritance and how it happens. If you wish to avoid having something like this occur, there are a number of ways to do so that can be as complicated as drafting a trust with QTIP provisions to simply updating your will based on changing needs. We will explore these solutions in upcoming articles, but for now, it is important that you recognize this problem exists - particularly if you're already remarried with children.