What Is It?
Disinheritance occurs when you fail to give any property under your will to an individual who would have received a share of your property if you died without a will. While the idea of disinheriting an heir brings to mind family arguments over who gets the family fortune, there are other reasons why you may not want to leave property to a family member. It could be that your second spouse is financially well off and you wish to make sure that your children from your previous marriage are provided for.
Maybe you have one child who is a successful doctor while the other is a single parent who barely manages to pay his or her bills, or it may just be that you are fighting with a family member and do not want to leave him or her anything. Whatever the reason, for our ConocoPhillips clients who are considering disinheriting an heir, there are certain steps you should take to be sure that their wish to disinherit an heir is properly carried out at their death.
Tip: You may want to consider disinheritance if an heir has a problem with creditors. Disinheritance prevents your heir's inheritance from ending up with his or her creditors since creditors cannot take what your heir does not own.
How Do You Disinherit Someone?
In General
While you can easily 'disinherit' a non-heir by not mentioning him or her in your will, it's important that these ConocoPhillips clients know that the rules are more complicated when it comes to your heirs. Merely not mentioning the name of a child or spouse in your will might not disinherit him or her and doing so can even open the door for will contests. In a will contest, the heir who is left out of the will could argue that he or she was mistakenly left out or overlooked. The outcome of a will contest depends in part upon your state's law regarding an omitted (referred to as 'pretermitted') spouse or child.
To be sure that your intent to disinherit an heir is unequivocal, these ConocoPhillips employees should consider including a disinheritance clause in their will. Such a clause can discourage the disinherited heir from contesting your will by claiming that you mistakenly left him or her out. This clause would indicate the exact name of the heir you wish to disinherit and explicitly state that the reason he or she is not included is that you wish to disinherit him or her. A sample disinheritance clause can be read as follows:
Example(s): 'In this will, I intentionally do not leave anything to John Doe, who is my son, because he is already provided for.'
These ConocoPhillips employees should consult their attorney if they are considering disinheriting an heir.
Tip: Do not include any detailed explanations in your will concerning why you are disinheriting your heir. A particularly negative explanation can give your heir cause to sue your estate for libel. If you wish to explain the disinheritance to your heir, leave a separate written statement with your executor.
Disinheriting a Spouse
In General
In most states, you cannot disinherit your spouse completely. If you live in a community property state, your spouse automatically owns one-half of the community property, which generally includes what either of you acquired during your marriage. In all states, spouses are protected from disinheritance by allowing a spouse to claim his or her statutory share, also known as 'electing against the will.' A statutory share can run anywhere from one-quarter to one-half of an estate, regardless of the terms of the will.
Example(s): Bob's will leaves all of his property, totaling $1 million, to his secretary, Paula, and nothing to his wife of 30 years, Sharon. If Sharon is content with no inheritance, the court will honor the terms of Bob's will. However, if Sharon wants to contest the will, she can claim her statutory share, which will be anywhere from one-quarter to one-half of the $1 million that Bob left to Paula. Paula will receive what is left after Sharon receives her statutory share.
Pretermitted Spouse
The pretermitted spouse statute protects the surviving spouse of a marriage that was not contemplated by the testator during the execution of the testator's will. In many states, marriage revokes a will, and the testator's property passes by intestacy as opposed to under a will executed before marriage. In states where marriage does not revoke a will, the statute commonly provides that the pretermitted spouse is to receive the share that he or she would have received had the testator died intestate. However, a surviving spouse may not be allowed to take under the pretermitted spouse statute if:
- It appears that the will was made in contemplation of the testator's marriage to the surviving spouse (e.g., it is stated in the will)
- The will expresses the intention that it is to be effective notwithstanding a subsequent marriage by the testator, or
- The testator provided for the spouse in a transfer that was outside of the will, with the intent that the transfer be in lieu of a testamentary provision, which is shown by the testator's statements or is reasonably inferred from the amount of the transfer
Example(s): John executes a will prior to marrying his wife, Joan. Assume that they both live in a state where marriage does not revoke a will. John dies without ever updating his will to include Joan. Joan could argue that she is a pretermitted spouse, since John did not contemplate the marriage when he executed his will. As a pretermitted spouse, Joan would be entitled to receive what she would have received had John died intestate (without a will). However, when Joan goes to court to contest John's will, the court could rule that Joan is not a pretermitted spouse if John's will contained a clause that expresses John's intent that the will was to be effective notwithstanding a subsequent marriage.
Tip: These clauses are sometimes viewed as against public policy.
Tip: For any ConocoPhillips employees who want more information, see Uniform Probate Code section 2-301, which is the law in some states but not all.
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Disinheriting a Child
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In General
While you have the right to disinherit a child, that right is severely restricted by laws that grant certain inheritance rights to minors and protect children of any age from accidental disinheritance. In the case of accidental disinheritance, a child can claim that he or she is a pretermitted child. Some states allow only a child who is born or adopted after the will was executed to receive an inheritance (take) as a pretermitted child. Other states allow a child who is born or adopted either before or after the will is executed to take as a pretermitted child. In either case, a pretermitted child is generally entitled to receive what he or she would have received had the decedent died intestate.
Example(s): John, a resident of State X, has a son named Jack. John later executes a will that leaves nothing to Jack. State X allows only children who are born or adopted after the will was executed to take as a pretermitted child. When John dies, Jack argues that he was accidentally left out of John's will and that he wishes to take as a pretermitted child. However, since Jack was born before the will was executed, he is not entitled to take as a pretermitted child.
Example(s): As another example, John, a resident of State Y, has a son named Jack. John later executes a will that leaves nothing to Jack. State Y allows children who are born or adopted either before or after a will was executed to take as a pretermitted child. When John dies, Jack argues that he was accidentally left out of John's will and that he wishes to take as a pretermitted child. Even though Jack was born before the will was executed, he is entitled to take as a pretermitted child. He receives what he would have received if John died intestate.
Are There Any Alternatives to Disinheritance?
If the reason you want to disinherit someone is that you think they might squander their money, you may want to consider leaving that person an inheritance trust. When you die, the money you leave to your beneficiary in an inheritance trust will pass directly to the trustee. The trustee then manages the money and pays your beneficiary the income. You can even include a motivation provision in the trust document. This provision allows the trustee to terminate the trust and give your beneficiary his or her share of the inheritance outright, as long as your beneficiary proves to the trustee that he or she no longer has a problem managing money.
Revising Your Will to Include a Disinheritance Clause
In General
One method of revising your will is to add a codicil, which revokes part of your will or adds a provision. However, since a codicil must be written, dated, signed, and witnessed, it may be just as easy to execute a new will. We'd like to remind these ConocoPhillips employees that when you execute a new will, you must be sure to properly revoke your old one. This can be done by including in your new will the following statement:
Example(s): 'I revoke all wills and codicils that I have previously made.'
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The retirement process at ConocoPhillips provides employees with various resources to guide them in selecting the most beneficial form of pension payment. Employees can access the "How to Choose the Best Form of Payment" link on Your Benefits Resources™ (YBR) to learn more about their options and determine what works best for their financial situation(ConocoPhillips_Your_Ret…).
What steps must be completed by employees at ConocoPhillips to ensure they initiate their retirement process accurately and avoid any delays? How crucial is the timing of these steps in determining the Benefit Commencement Date (BCD)?
Employees at ConocoPhillips must initiate the retirement process by requesting their pension paperwork 60-90 days before their Benefit Commencement Date (BCD). Timing is crucial, as missing deadlines may delay the BCD and associated payments. Completing all steps on time ensures that the retirement process flows smoothly(ConocoPhillips_Your_Ret…).
Given the complexities associated with the lump-sum pension payment option at ConocoPhillips, what considerations should employees take into account before electing this choice? How does the current interest rate at the Benefit Commencement Date impact the lump-sum amount?
Before electing a lump-sum pension payment, ConocoPhillips employees should consider the current interest rate at their BCD, as it directly affects the lump-sum amount. A higher interest rate typically reduces the lump-sum payment, making timing and rate awareness critical(ConocoPhillips_Your_Ret…).
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For employees considering rolling over their lump-sum pension payment from ConocoPhillips, what procedures should they follow to ensure compliance with IRS regulations and to avoid tax penalties? How can effective planning influence the success of this rollover?
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ConocoPhillips provides employees with tools such as the "Project Retirement Income" feature on YBR, empowering them to calculate and project their retirement income. These resources help employees make informed decisions about their financial future(ConocoPhillips_Your_Ret…).
How do deadlines play a pivotal role in the benefits process for retiring employees at ConocoPhillips, and what specific dates must be adhered to in order to avoid payment delays? Can you provide examples of consequences resulting from missed deadlines?
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What are the added advantages for employees at ConocoPhillips who actively seek assistance or information from the Benefits Center during their retirement planning? How can this proactive approach enhance their overall retirement experience?
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