Dealing with difficult heirs, do I cut them off?

Difficullt Heirs

When making your estate plans, it’s tempting to think that everything will work out peacefully, amongst your heirs, after you’re gone.  But all too often that’s not the case. Whilst bickering amongst siblings can be expected, the real problem arises when one of the heirs objects fiercely to the estate plans and threaten to file a lawsuit challenging them. Often this leads to a protracted and costly legal battles that drains funds from the estate, prevents other heirs from moving forwards and becomes a destructive to the entire family, as sides a chosen.

However, there are ways to address the problem of a difficult heir’s in advance, and structure the estate in a way that protects the interests of the entire family, as we may not be able to identify who the problematic person may be. Therefore, you should talk with an experienced trust and estates attorney about adding appropriate language, to your legal documents, that create consequences to a difficult heir under certain circumstances.

When establishing a trust, you can include clause’s that punish any family member that challenges the provisions by potentially cutting them off from any inheritance.  That can be a more effective approach than relying on a prenuptial agreement between a spouse and one of your heirs.  Why is this important?  In some cases a spouse, or the spouse’s parents become “outlaws” rather than in-laws when it comes to the family fortune. They might pressure a son or daughter in ways that disrupt family harmony – unless there is a provision that takes away any financial incentive to push for more than their allotted share.

The threat of cutting off a difficult heir may be an uncomfortable thought, but a necessary step to ensure harmony within the family.  For instance, a child or grandchild with a serious substance abuse or mental health problem needs to have strict limits set with regard to the family’s financial assets or income. An heir with such issues, should not receive any distributions, let alone a large lump sum distribution, as this could lead to an overdose or another type of personal tragedy. It would be more prudent to require direct payments for care and oblige regular blood tests for alcohol or drugs prior to any distributions.

It is more than reasonable to set limits on the behaviors you will tolerate from your children and grandchildren. No matter how much you love your family members, they should never be allowed to be verbally or physically abusive.  Instead, put your foot down, give them a warning and if the abuse persists, cut them off.

On a more positive note, one of the best ways to promote harmony, when wealth is involved, is to prepare a family governance document with the guidance of an outside financial professional.  This document should outline the family values, such as the importance of giving back and being involved in charitable activities. It can also outline the rules and expectations for your children and grandchildren before they are entitled to benefit from any distributions.

Because fights over inheritance are emotional, it is better to prepare the rules, as well as the protective clauses, whilst you are around and before the fights begin. Solely putting the responsibility of your estate into the hands of an impartial trustee, may not be enough, you need to ensure that you arm them with the tools to be effective in protecting your family from the problems caused by a difficult heir.

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