It’s hard to imagine that someone could accidentally disinherit their own children, but it happens all the time to people who don’t regularly update their estate plan.
It’s important to update your estate plan with a professional every few years, or whenever there is a significant change in your circumstances or in the tax laws. Below are six ways disinheritance can happen:
1) Harry wrote a will leaving his house and his business to his children, and anything left over to his nephew. Many years later, he sold the house and the business. When he died, there was no house or business to go to his children – and 100 percent of his assets went to his nephew.
2) When Bob and Janet married, they both had children from a prior marriage. When Bob died, he left everything to Janet. When Janet died, she left everything to her children- and Bob’s children got nothing from their father at all.
3) Ellen figured a do-it-yourself will – using a form she found on the Internet – was good enough. She wanted to leave certain assets to certain children and give more money to one child. But the will wasn’t valid under her state’s law, so nothing she wrote had any effect.
4) Ted and Linda each wrote a will leaving money to their children. They had given their son a $50,000 gift during their lifetime, so they wrote wills giving their daughter $50,000 more than their son, intending to even things out. But Linda didn’t update her will after Ted died, so when Linda died, the daughter got an extra $50,000.
5) Peggy got divorced, but she neglected to update her will. She also never changed the beneficiary of her life insurance, IRA and 401(k) plan. When she died in an accident, all the assets she would have wanted to go to her children instead went to her ex-husband – who used them to benefit his new family rather than his old one.
6) After Bill’s wife died, he named his son as his survivor on his bank and brokerage accounts. Later he remarried and had more children. He rewrote his will to benefit all his children equally. But he never updated his financial accounts, so when he died, all the money in the accounts went only to the first child.