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Monday, February 21, 2011

How can I prevent step-grandchildren from inheriting?

The question of making sure that step-grandchildren don't inherit a portion of a grandparent's estate comes up more frequently than you might think. Occasionally a client will preface the question with a remark like "I don't want to sound mean, but...", which I think is totally unnecessary. It's your hard-earned money so why should you feel bad about deciding who gets it - and who doesn't - after you're gone?

Grandparents often, but of course not always, feel differently about step-grandchildren than they do about their child's biological and adopted children. They tell me they feel less of a connection with the step-grandchildren. Although they acknowledge the step-grandchildren as a part of their children's lives, they don't always think of them as a part of their own lives. Many explain this by saying "they aren't my own flesh and blood".

This sentiment is very relevant for a grandparent who is preparing a will. In a typical family, spouses leave their estates to each other, and when the spouse has deceased, the estate is divided among the children. This isn't necessarily the law, but it is by far the most common and expected arrangement.

So the grandparent makes a will leaving everything among his or her children. The lawyer will then ask what should happen if one of the children should die before the grandparent. The most common and traditional arrangement is that the deceased child's children (the grandchildren of the testator) will divide the deceased person's share. (Now you see why I draw so many diagrams and family trees in meetings with clients!)

This is the point at which the grandparent asks about the step-grandchildren. These days, blended families are more common than the traditional nuclear family, so the grandparent is absolutely right to clarify who is in the group of "the deceased child's children" and who is not. The idea is not to punish a step-grandchild in any way. The goal is to leave as much as possible to the grandparent's own blood relatives. The secondary goal is to make it clear to anyone reading the will exactly what the grandparent intended so that there are no arguments or misunderstandings.

The grandparent who wants to exclude step-grandchildren is aided by law. Much of the law of inheritance is based on the concept of bloodlines. Therefore, a child or grandchild who is not related by blood (or adopted) is not normally automatically included as a beneficiary. If you want to know exactly what the law says in your province or territory, you should sit down with an experienced estate lawyer in your area. That way you can obtain specific advice rather than general information.

Grandparents often like to solidify and clarify this default position by specifically including a clause that defines who is meant by the word "grandchild" in their wills. It's a simple matter of a few words to explain who is meant to be included and who is not, and it may save the grandparent's estate from being embroiled in a dispute.

This works the other way too, of course. If you, as a grandparent, want to make sure that your step-grandchildren are included in your estate, you should make sure that is specifically set out in your will.

4 comments:

  1. My father (deceased) married the woman he had an affair with, and one of the executors (my brother) has claimed that all the grandchildren from both sides will inherit equally according to the will. is this fair as the second wife has more children, who in turn have more children, and my father's blood grandchildren stand to get a very diluted inheritance, if any. do they have any rights as beneficiaries and should I try to see the will for myself to review it?

    ReplyDelete
    Replies
    1. What's "fair" is what your father wanted. Nobody else has to like it. It's not up to you or anyone else to re-write or second guess his will. If you are concerned that perhaps your brother has misunderstood the will, you can suggest that he consult with an experienced lawyer to interpret the will.

      Lynne

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  2. My step grand daughter was and is my choice to inherent any and all I have.She was taken out of my life divorced her grandmother how do I make sure that she receives.everything?No problems from her mom or grandma

    ReplyDelete
    Replies
    1. Hi Tom,
      Your first step is to look at whether you have any legal obligation to include anyone else in your will. If you have a current spouse or live-in partner, or any children who are financially dependent on you due to a disability, then you must include them in your will.

      Assuming that you have nobody else that you are required to include, then there is no reason you cannot give all of your estate to your chosen beneficiary.

      You must find an executor you can trust to get the money to her. You haven't said whether or not your step-granddaughter is a minor or an adult. If she is a minor, her inheritance must be held in trust until she becomes an adult. Normally these trusts are looked after by the executor of the will, so choose carefully.

      In your will, you can make provision for her to receive some amounts prior to becoming an adult, if they are needed for her care or education.

      Lynne

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