Estate Planning Legal Topics

Disinheriting? Give Them Something to Think About

It’s fairly common for an estate planner to meet with a client who wishes to cut one or more of his or her intestate heirs out of the estate plan. Like Miss Birdie in “The Rainmaker,” they look at you and say “cut, cut, cut!” But is leaving nothing to an intestate heir or previously included beneficiary really a good idea? Or, should you counsel your clients to give such folks something to think about?

Better practitioners advise their clients to give the “to be disinherited” heir at least something. How much depends on the situation, but a rule of thumb is “enough to make them think,” i.e., a sum that’s sufficient to make them weigh the risks and benefits of launching a contest.

Consider this example, Miss Birdie’s estate is estimated at $500,000 after debts and administration costs. Miss Birdie has two children. Sunny, who has never been very close to his mother, and Dawn, the archetypal caretaker. Miss Birdie wishes to split her estate between Dawn and the local animal shelter, cutting Sunny out altogether.

In this situation, Sunny has no motivation to avoid contesting the estate plan. Assuming a 20%/30%/40% contingency arrangement with a “no recovery, no attorney fee” provision, his upside though trial can be estimated at $150,000. But his downside is equal to the litigation costs, over which he has some control. Knowing there’s a preference for early mediation and a chance of a defense cost offer, why shouldn’t he roll the dice?

On the other hand, let’s say Miss Birdie gives 50% of her estate to Dawn and splits the remainder equally between Sunny and the animal shelter (25% each). If Sunny does nothing, he gets $125,000, very close to his “upside” in litigation. But if he contests, he could lose it all through enforcement of the no-contest clause and end up in a net negative due to costs.

The second scenario clearly places Sunny in a position to think carefully before pulling the litigation trigger.

You should always discuss possible alternatives to an all-or-nothing approach when your client requests a disinheritance. And put your notes on such counseling in the client’s file. You should also confirm your client’s rejection of your recommendation, and note the potential downside, in a letter to your client. After all, even if Miss Birdie fails to take your advice, your testimony and notes aren’t subject to the attorney-client privilege in a post-death contest proceeding. And, their early release may even stop a contest shortly after initiation. See Evid C §§957, 959, 960, 961.

For guidance on all aspects of will drafting, turn to CEB’s California Estate Planning, chap 5 and California Will Drafting.

Other CEBblog™ posts you may find useful:

© The Regents of the University of California, 2019. Unauthorized use and/or duplication of this material without express and written permission from this blog’s author and/or owner is strictly prohibited.

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