What If You Outlive Your Heir?

You want to leave your estate to certain people. But suppose they die first. What then?

Ideally, you’ve spelled out your wishes—and contingency plans for scenarios like this—in a written will. If not—and assuming you never get around to writing a will—Louisiana (assuming you live here) will use its “laws of intestacy” to essentially create a will for you. 

In short, Louisiana law will decide who gets what out of your estate. 

Depending on circumstances, a court may award portions to your spouse, children, siblings, cousins, or even your parents. 

Some folks are okay with this. Many, however, want more of a say in who gets their estate. 

So back to our original question: Suppose you outlive the person or people to whom you planned to leave your estate? Consider this scenario:

Let’s say you have five children. Four of them have kids of their own. The fifth is childless.

Let’s also say you want to treat your kids equally. Since your estate is worth $500,000, you envision each child inheriting $100,000 at your death. 

But suppose one of your children (with children) dies. Do you then want your inheritance split only four ways—thereby ignoring your grandchildren? Or would you prefer for the deceased child’s portion of your estate to be split equally among his or her children (i.e., your grandchildren)? 

And what about the fact that your children have differing numbers of offspring? One, as mentioned, has none, another has one child. Another has six.

Not so simple, is it?

The most common approach I’ve seen is to split things equally among one’s children, with portions going equally to grandchildren if their parent is deceased. But just because this is common doesn’t make it right for you.

Sometimes circumstances call for unequal treatment. 

  • You may want to give a larger share to a child with a special need.
  • You may be uncomfortable leaving a large sum of money to a child who struggles with substance abuse, or laziness, or who has a history of impulsive, unwise behavior. Not wanting to enable them (or ruin them), you may wish to give them a lesser share (or no share at all). 
  • You may decide to give a certain child a larger share because that child has sacrificed a significant portion of their life and gone to great expense to care for you and/or your spouse. 

These examples are certainly not recommendations. Good people can (and do) disagree over how to handle such delicate situations.

But without a will, they will be handled one way only—according to the dictates of Louisiana law. (And that law will be applied by some judge who probably doesn’t know anything about you.) 

If you believe that you—not the state—know best how to distribute your estate wisely, see a lawyer and draft a will. A competent attorney will make sure to account for contingencies like the ones discussed here.

And for practical advice in how to grow an estate that you can one day pass on, write to me at bmoore@argentadvisors.com. I’ll send you my free e-book “How to Put Financial Worries in Your Rear View Mirror.” There’s no cost and no obligation.

Argent Advisors, Inc. is an SEC-registered investment adviser. A copy of our current written disclosure statement discussing our advisory services and fees is available upon request. Please See Important Disclosure Information here.

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