How The LGBT Community Can Disinherit A Family Member

As we celebrate Pride Month 2019, we are reminded that progress has been made over the years, but many in the LGBT+ community are still estranged from members of their family or even their entire families.  We wanted to share some advice for Queer people who desired to cut someone out of your estate.  Or for that matter disinherit someone who you just don’t want to get your money when you pass.

Whether you just don’t get along with a sibling, want to help out a family member who is a bit more challenged financially, or disinherit a homophobic prick you just happen to be related to, you will likely want to look for way to keep this person (people) from inheriting your assets when you pass.  You may also be taking a proactive step to protect your same-sex partner from the headache of a contested will or estate plan.  Even worse is doing nothing and having your life be dragged through the hell that is probate.

While anytime there is money on the line, things can get stressful.  Estate Planning is more important for many in the LGBT community.  Beyond the fact that we are more likely to be estranged from at least some of our family, we also are less likely to have children.  No offspring increases the odds that your money will go to some long lost relative, that is if you don’t specify where you want it to go whether that is your spouse, a charity, a pet, or even some of your best friends.

How Can You Disinherit a Family Member?

It may come as a surprise, but blocking a family member on Facebook won’t keep them from suing for a portion of your estate they feel they are entitled too.  Before Same-Sex Marriage was the law of the land, your 85^th cousin you’ve never met would have more rights to your assets (and stuff) than your life partner, assuming you didn’t take a proactive approach to Estate Planning.

If you are seeking to disinherit a family member, it is imperative that you obtain the guidance of an estate planning attorney who works with the specific laws of your state.  This is not the time to try and save a few bucks using legal zoom, or just googling “How to Disinherit Someone without an Attorney.”  The reality is, without proper legal documentation, your relative will potentially be able to appeal your actions and cash in after your death.  Even if they are unsuccessful, your estate will likely get hit with extensive legal bills.

Should Your Use a Living Trust or a Will?

There is a long list of reasons to choose a Living Trust over a will.  This is even more relevant for those who wish to exclude a family member from a portion of their estate.  The bottom line, a will is more accessible to contest than a Living Trust.

It could be claimed that you were under the “undue influence” of another family member, or your new spouse, or old spouse for that matter.   They would likely claim that you didn’t intend to keep them from inheriting their share of your assets.  They could also argue that you did not understand what you were signing. Alternatively, worse, that you were mentally incapable of making this type of decision at the time the will was signed.

For those of you who like your privacy, a will is a public document.  Whereas a Trust does not need to be filed with the court, adding a layer of privacy and protection for you and your heirs.  Furthermore, in many states, only beneficiaries of a trust have standing to challenge the provisions held within it.

That homophobic parent, sibling, or cousin could still try and challenge the terms of your living trust. However, this is still a much stricter process than challenging a will.  They would likely need to challenge the living trust by asserting that you were incapacitated at the time it was created.  Wills are often scribbled or typed and signed on someone deathbed. Whereas a living trust is more likely to have been created years before death, with the help of an estate planning attorney.  Likewise, a living trust is typically witnessed by several people who would be able to later attest to the financial state of the deceased.  Also, the creator of a living trust has likely titled property and accounts in the name of the trust, which further proves they were at least aware of what was happening.

Often people will use a trust account to pay bills or invest non-retirement assets. Once there is a track record of using these trust accounts in this way it would be much more difficult to claim that someone didn’t understand what they were doing when they met with an attorney (several times), set up a trust, then opened accounts in the name of the trust.

Related: Who Will Care for LGBT Boomers

Protecting the Disinheritance

Your estate planning attorney will likely want to include a “No Contest” clause, especially if you are disinheriting a relative. In plain English, the provision will spell out that if you contest this estate plan in any way, you will get nothing.

Beneficiaries and a Disinheritance

All of the talks above was regarding things like your house, money in the bank, or non-retirement investment accounts.  For most retirement accounts (think 401(k), IRAs, 403(b), 457, Annuities, or SEP IRAs, Life Insurance), your assets will be distributed to the listed beneficiaries. So it should be pretty easy to get the money to go where you want it to go, just list them as the beneficiary.

Related: How to Minimize Taxes When You Inherit an IRA

The big exception here is for married folks living in certain states.  Say you follow the plot of Grace and Frankie and come out later in life.  You leave your opposite-sex spouse for your same-sex life partner. To change your beneficiary to a non-spouse, you will need your spouse’s permission in many states.

Other than that, changing your beneficiary on an account should as simple as filling in a form.  Take this time today, and go check and see who your beneficiaries are on each of your accounts. If it isn’t who you want it to be, change it.

Another benefit is distributions of assets via account beneficiary is private.  Only the IRS and the person(s) receiving benefits will know.  Additionally, beneficiaries are nearly impossible to contest, especially if they have been in place for a long time.

From my point of view, it is your money, do with it what you want.   Enjoy it while you are alive. Ideally, with a great financial plan that will help ensure you don’t run out of money before you run out of life.   Beyond that, please pass it on in the way that will bring you the most joy.

Just a final note, I’m a gay Certified Financial Planner™ an am not providing legal advice, only a licensed attorney can do that.   All the same, as a financial planner, I have been there when people are trying to clean up a mess of an estate.  Whether that is family fighting over money or tens of thousands of dollars wasted on probate and legal fees, if you have built up and nest egg over your lifetime, do yourself (and your heirs) a favor and put together a proper Estate Plan.