This originally aired on the Catholic Faith Network’s show CFN Live: https://youtu.be/cqwytfrPYjo

What does “entitlement” mean in Estate Planning?

Entitlement refers to a person’s expectation that they are deserving of certain treatment. Does a child expect to receive an inheritance from their parent because they are a good child or merely because they are a “child”. Let’s sort this out.

State Rights

When the State gives inheritance rights to biological children by law, it is referred to as “intestate succession”. These laws help determine who is in line to receive an inheritance when someone passes away.

For example, according to New York intestate succession law, biological children of the decedent are given full-fledged inheritance rights to their parent’s estate.

This also applies to illegitimate, or non-marital, children of the deceased, provided that biological paternity can be scientifically proven.

Adopted children, because they are considered the same as biological children in New York, possess full intestate inheritance rights. However, these same rights do not automatically apply to foster children and stepchildren if the deceased never adopted them.

According to New York inheritance laws, if you die before the birth of a child you conceived prior to your death, that child will still hold biological children’s intestate rights to your estate.

How much can a child be entitled to?

This will depend upon who survives the decedent and what State the person resided in.

Typically, the surviving spouse inherits everything. In the absence of a surviving spouse, then the children inherit everything equally. That would be the case for example in Florida.

But not all State laws are the same. New York will give your estate to your children if you’re unmarried or if your spouse predeceases you. But if a spouse survives you, your children will only receive the balance of your estate after your spouse has received $50,000 plus half of the remaining estate balance.

Also, in community property states, the rules can get even more complicated.

Community property will pass to the surviving spouse while separate property may pass one-half to the surviving spouse and one-half to the children of the deceased spouse. This would be the case in California, which is a community property state.

What about grandchildren?

The only situation in which New York will afford your grandchildren any property rights via intestate succession is if your child (your grandchild’s parent) died before you. Otherwise, if your child is alive at the time of your death, he or she will be given inheritance rights, not your grandchild. Of course, you can avoid any complications by naming your grandchildren as heirs to the specific property in your Will, if you so desire.

If there are no surviving spouse, children or grandchildren, then we look at the applicable intestacy law. Extended family members may be entitled to inherit.

In the situation, it is likely that the estate would pass to parents, then siblings, then grandparents, then aunts and uncles, then nieces and nephews and so on and then ultimately to the State if there is no one alive or available to receive the estate.

Parental Rights

Parents can also take control over who inherits their assets and avoid having the intestacy law apply.

If the parent’s estate passes by Will or by Trust, there is no requirement under the law to leave any assets to a child.

Further, if an asset passes by a beneficiary designation such as a beneficiary designation on a life insurance policy or retirement benefits, these assets would also not be subject to the intestacy laws. Thus, the children would have no rights in those assets.

Assets can also pass by operation of law such as jointly owned assets with right of survivorship.

It is also important to note that the children do not have an elective share.  This means that if the child is disinherited, the child is not entitled to a share of the estate.  The only person who may have such a right is a surviving spouse.

In New York, regardless of what a Will provides, the spouse has the right of election to take a share of his or her spouse’s estate. The amount of the spouse’s share is the greater of one-third of the net estate, or $50,000.

What if a parent feels pressure to leave assets to a child?

I would advise the parents to consider the consequences of their decision – would their decision meet their desires and what would be the impact of their decision on the child and the entire family.  I would point out that these assets of the parent’s assets and that the children are not entitled to an inheritance as well.  This is where an experienced estate planner can give input and be helpful in navigating the decision-making process.

We hope you found this article helpful. Contact our office today at 1 (800) 680-1717 and schedule an appointment to discuss what makes sense for you and your loved ones.