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I am 73 and have one son who is unmarried and lives in the same town. I also have five siblings. I am very close to my youngest sister who is on disability. I paid my home off two years ago, and I have some 401(k) savings.
I am planning on leaving my home and all of my 401(k) and savings accounts to my sister. I owe no money to anyone. I have a $10,000 life insurance policy I put in my son’s name.
I know he will be upset, but he has been stealing from me for years as he did with his dad when he was living. He has a set of master keys and gets in even after I’ve changed my locks and also stole my extra car key! Can he fight my decision in court to get the money and house after I pass on?
-L.
Dear L.,
I can’t promise you that your son won’t fight your decisions in court. But it’s actually quite difficult to win such a challenge. Still, there are a few things you can do to make it even harder for your son to successfully contest your final wishes.
Your son probably has standing to contest your will and beneficiary designations. That doesn’t mean he’d actually win — it just means he’d have the right to make the case. In many states, any close relatives who would automatically stand to inherit assets from someone if they died with no will can mount a challenge, as can anyone named in a previous version of the will.
Winning is much more difficult. Your son would probably have to prove that you lacked mental capacity or were under improper influence when you made your estate plan. Or he’d have to prove that the relevant documents weren’t signed in accordance with your state law. He doesn’t have a right to an inheritance just because he feels entitled to one.
One way to avoid a court dispute is to keep as many assets out of probate as possible. Retirement accounts, like your 401(k), pass directly to whomever you name as your beneficiary. So as long as your sister is listed, that money will avoid probate and go directly to her.
You can also make your bank accounts payable on death to your sister so they can bypass probate as well. It’s a little more complex when you’re dealing with your home. One option to explore is putting your home in a revocable trust and making your sister the beneficiary. You could also use a revocable trust to pass personal property, like your car, furniture and any valuables, to your sister.
It’s still possible for your son to contest your beneficiary designations, but it’s harder to do. Unlike probated property, assets that pass through beneficiary designation won’t become part of the public record. Your son obviously knows you have a home and would be able to see that it was transferred to your sister through property records. But he wouldn’t know what retirement and bank accounts exist since the details would be private.
Assuming you have a will, you may want to revise it to explicitly state that you don’t want your son to receive anything beyond the life insurance money. Attorneys often recommend taking this step in case the disinherited person tries to claim they were accidentally left out of the will.
It’s essential to name a contingent beneficiary, who will receive your property if your sister dies before you do. Assets that typically avoid probate will be distributed by a court if there’s no living beneficiary. In that event, it’s quite possible your son would inherit your home or money. If you aren’t close with your other siblings or family members, you could name a close friend or charity.
Hiring an attorney to review your estate plan is worthwhile here, given your concerns that your son may try to fight. But since your sister is on disability, you should also discuss how an inheritance will affect her finances. An inheritance wouldn’t jeopardize her disability payments, but it could put certain other benefits, like Medicaid, at risk.
I’d also suggest investing money in a home security professional who can help you equip your house and car against your son’s future break-ins. The fact that he has such easy access makes me worry for your safety.
The odds of your son clawing money out of your estate are pretty slim. If your estate is relatively small, it may not even be worth it for him to fight, given the substantial costs involved. But for peace of mind, consult with an attorney to be sure your estate plan is as airtight as possible.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to [email protected].
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