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 L3Harris 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 L3Harris 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 L3Harris 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 L3Harris 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 L3Harris employees who want more information, see Uniform Probate Code section 2-301, which is the law in some states but not all.
Featured Video
Disinheriting a Child
Featured Video
Articles you may find interesting:
- Corporate Employees: 8 Factors When Choosing a Mutual Fund
- Use of Escrow Accounts: Divorce
- Medicare Open Enrollment for Corporate Employees: Cost Changes in 2024!
- Stages of Retirement for Corporate Employees
- 7 Things to Consider Before Leaving Your Company
- How Are Workers Impacted by Inflation & Rising Interest Rates?
- Lump-Sum vs Annuity and Rising Interest Rates
- Internal Revenue Code Section 409A (Governing Nonqualified Deferred Compensation Plans)
- Corporate Employees: Do NOT Believe These 6 Retirement Myths!
- 401K, Social Security, Pension – How to Maximize Your Options
- Have You Looked at Your 401(k) Plan Recently?
- 11 Questions You Should Ask Yourself When Planning for Retirement
- Worst Month of Layoffs In Over a Year!
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 L3Harris 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.'
What specific factors should L3Harris Technologies employees consider when determining the most suitable form of pension benefit at retirement? Employees of L3Harris Technologies may have various options, such as life annuities, contingent annuities, and lump-sum payouts. Understanding the implications of each option, including tax treatments and benefit guarantees, can be crucial in making a decision that aligns with long-term financial goals. It is also important to consider how the selected form may affect survivor benefits and overall retirement income planning.
Pension Options at Retirement: L3Harris Technologies employees have various pension benefit options to consider at retirement, such as life annuities, contingent annuities, and lump-sum payouts(L3Harris Technologies I…). Each option has different tax treatments, survivor benefits, and guarantees. For example, selecting a life annuity ensures a fixed monthly payment for life, while a lump-sum payout might offer more flexibility but comes with immediate tax implications. Employees should evaluate how each option aligns with their long-term financial goals and whether it provides adequate survivor protection for dependents(L3Harris Technologies I…).
How does L3Harris Technologies determine eligibility for early retirement, and what implications does this have for pension benefits? Employees should familiarize themselves with the criteria for qualifying for early retirement, including age and service requirements. Additionally, understanding the benefits that are available should retirement occur before the standard retirement age can affect financial planning, as these benefits can differ significantly from those available at normal retirement age due to reduction factors or penalties.
Early Retirement Eligibility: L3Harris Technologies determines eligibility for early retirement based on age and years of service. Employees may qualify for early retirement if they are at least 55 years old and have completed 10 years of service(L3Harris Technologies I…). Opting for early retirement can result in a reduced pension benefit due to the longer payment period. These reductions, known as early retirement penalties, affect financial planning since the payout is lower compared to waiting until the normal retirement age(L3Harris Technologies I…).
In what ways do the pension formulas at L3Harris Technologies differ, and how can employees assess which plan is most advantageous for their retirement? Employees participating in the L3Harris pension plan can choose between different formulas, such as the Traditional Pension Plan and the Pension Equity Plan. Assessing which formula may yield higher benefits involves understanding the benefits calculation processes, including how each formula accounts for years of service, salary history, and participation criteria, which can significantly impact total retirement income.
Pension Formulas: L3Harris employees can choose between different pension formulas, such as the Traditional Pension Plan and Pension Equity Plan(L3Harris Technologies I…). The Traditional Plan is based on years of service and final average pay, while the Pension Equity Plan uses a lump-sum formula that accrues value over time. Understanding how each formula calculates benefits is essential for employees to determine which plan will provide higher retirement income, depending on their service years and salary history(L3Harris Technologies I…).
How should L3Harris Technologies employees prepare for the selection of a beneficiary, and what are the potential impacts on their pension benefits? Selecting a beneficiary is an important component of retirement planning. Employees at L3Harris Technologies must understand the implications that come with adding a spouse or other individuals as beneficiaries, including the effect on benefit amounts and how beneficiary selection can influence survivor payouts. Moreover, they should familiarize themselves with the requirements for updating beneficiary information and the legal implications of such designations.
Beneficiary Selection: Choosing a beneficiary is a crucial step for L3Harris employees. Adding a spouse or another individual as a beneficiary may reduce the employee's pension benefit but ensures that a portion of the pension continues after the employee's death(L3Harris Technologies I…). Employees should be aware of the survivor benefit provisions, spousal consent requirements, and the need to regularly update their beneficiary information(L3Harris Technologies I…).
What procedures must L3Harris Technologies employees follow to appeal a denied pension benefit claim, and what timelines should they be aware of? Employees should be well-informed about the steps involved in the appeals process for denied claims, including how and when to file an appeal and the importance of providing adequate documentation. Understanding the statutes of limitations related to claims and appeals can significantly influence the outcomes for employees seeking to reinstate or secure their benefits.
Appealing Denied Claims: L3Harris Technologies employees must follow a formal process to appeal denied pension benefit claims(L3Harris Technologies I…). The process includes submitting an appeal within a specific timeframe and providing supporting documentation. It is important to be familiar with the statute of limitations and administrative remedies to ensure the best chance of success when appealing a decision(L3Harris Technologies I…).
How does L3Harris Technologies handle survivor benefits, and what actions should employees take to ensure that their surviving spouses or partners have access to these benefits? Understanding the components of survivor benefits at L3Harris Technologies is crucial. Employees should learn about the eligibility of their spouses or partners following their death, the type of benefits due, and any actions required to secure these benefits. Familiarity with the plan’s rules surrounding survivor benefits and timelines for elections can also affect the financial security of beneficiaries.
Survivor Benefits: L3Harris offers survivor benefits to spouses or designated beneficiaries(L3Harris Technologies I…). Employees must ensure that their spouse or partner is properly designated to receive these benefits, which may involve selecting an annuity option that provides continued payments to the survivor. Understanding the timelines for making these elections and the rules governing survivor benefits is crucial for securing financial support for loved ones(L3Harris Technologies I…).
What resources are available for L3Harris Technologies employees for receiving personalized retirement counseling, and how can these resources aid in making informed financial decisions? Employees may benefit from accessing professional counseling services or informational resources provided by L3Harris Technologies. These resources can include individual retirement planning sessions that help employees align their pension benefits with their overall retirement strategy, ensuring that they utilize their benefits effectively and are informed about their options.
Retirement Counseling Resources: L3Harris provides personalized retirement counseling services to assist employees with their pension and retirement planning(L3Harris Technologies I…). These resources include individual sessions to discuss how pension benefits fit into overall retirement strategies. By leveraging these services, employees can make well-informed decisions about their financial future(L3Harris Technologies I…).
How can employees of L3Harris Technologies find out more about their eligibility for the Cash Balance Plan and the advantages of this plan over traditional pension formulas? Employees should research what defines an "active Cash Balance Plan Participant" as well as the benefit calculations associated with it. Investigating the elements that set this type of plan apart—specifically regarding lump-sum distributions and the ability to track benefits—can better inform employees about the potential advantages for their future retirement income.
Cash Balance Plan: Employees interested in the Cash Balance Plan can research its advantages over traditional pension formulas. The Cash Balance Plan allows for lump-sum distributions and provides clear benefit tracking, which can be more appealing to employees looking for flexibility and control over their retirement funds(L3Harris Technologies I…).
What impact do potential changes to the L3Harris Technologies pension plan have on current employees, and what steps should they take to stay informed about such changes? Employees should remain vigilant regarding any amendments to the pension plan that could influence their retirement benefits. This includes understanding their rights under ERISA and staying engaged with communication from L3Harris regarding plan updates, ensuring that they are equipped to make timely decisions based on the latest information.
Plan Changes: L3Harris employees should stay updated on any changes to the pension plan, which could impact their benefits(L3Harris Technologies I…). Monitoring communications from the company and understanding their rights under ERISA is essential to making timely decisions based on new plan terms or amendments(L3Harris Technologies I…).
How can employees of L3Harris Technologies contact the Benefits Service Center to address specific questions regarding their pension plan or retirement strategy? It is essential for employees seeking clarity on their pension benefits or retirement planning to know how to reach out to the L3Harris Benefits Service Center. This center acts as a vital resource, and understanding its operations—including contact times, methods of contact, and the types of inquiries that can be addressed—will enable employees to receive the guidance they need regarding their benefits.
Benefits Service Center: L3Harris employees can contact the Benefits Service Center for any questions regarding their pension or retirement strategy. The center provides assistance with understanding pension benefits, resolving issues, and addressing specific inquiries related to retirement planning(L3Harris Technologies I…)(L3Harris Technologies I…).