This year, America celebrates the 250th anniversary of the signing of the Declaration of Independence, a document that formalized concepts of self-determination, privacy, liberty, and limited government.

Because Americans are so accustomed to the idea of financial freedom and the ability to make their own decisions, it may be surprising to learn that not everyone around the world has such opportunities. Countries and jurisdictions that govern based on civil or religious laws often don’t embrace citizens’ autonomy when it comes to their estate planning decisions.

Forced Inheritance and Forced Heirship Laws

Forced inheritance – also known as forced heirship – is a legal mandate to reserve a portion of an estate for the benefit of certain heirs. Forced inheritance and forced heirship laws are prevalent in much of Europe, the Middle East, Asia, and Latin America, and various Islamic jurisdictions.

Countries that impose forced heirship follow a civil law system. Unlike the common law system that most U.S. states follow, civil laws are prescriptive in nature; that is, they are specific in dictating what citizens can and can’t do and the penalties for noncompliance or for doing something prohibited by law.

Usually, the legal principle of forced inheritance is in place to make sure that children and spouses receive at least some financial provision after a person dies. Some jurisdictions also include parents or grandparents as protected heirs.

While countries that impose forced heirship may allow the creation of Wills and other estate planning structures, a portion of the deceased person’s assets must be awarded to his or her heirs regardless of what the estate planning documents may say in writing,

Implications of Forced Inheritance Laws

The legal principle of forced heirship means that a person does not have full testamentary freedom to distribute their estate as they wish.

With forced inheritance laws:

• It’s illegal to disinherit your children, even if you are estranged, they have engaged in destructive behavior, or you simply don’t want them to inherit any of your assets.
• If your child predeceases you, their children may gain beneficiary rights under forced heirship mandates.
• A person’s estate is divided into two parts: a forced portion that goes to protected heirs and a ‘disposable estate’ that allows the deceased person to leave property to anyone of their choosing.
• To prevent a person from giving away all their assets before they die, courts may impose “claw back” provisions to satisfy the forced heirship requirements.

We have often pointed out how disconcerting it can be to have your assets go to someone unintentionally through holes in your estate planning. With forced inheritance laws, you have no choice but to leave at least part of your estate to forced heirs – regardless of how you feel about them or what your relationship has been like.

Disinheriting a forced heir is extremely difficult and only allowed in very specific cases, such as if a child intends to harm or murder a parent. In rare cases where disinheritance could be allowed, specific estate planning strategies like carefully structured Trusts sometimes can be used to protect the surviving spouse and to manage and protect the forced portion of an estate.

Testamentary Freedom in the United States

Fortunately for most Americans living in the continental United States, nearly all states follow a common law system that generally allows freedom in financial decisions and testamentary freedom – the ability to decide for yourself who will inherit your assets.

Exercising your testamentary freedom means that you have a legal right to give your money and assets to anyone you choose, disinherit children and prevent specific people from receiving any part of your estate, protect your interests in blended family situations, decide what happens to a business you own, and prepare ahead of time for the many scenarios that can happen in life.

Louisiana is the only state that bases its laws on a civil law system and has specific inheritance requirements. Children who are under the age of 24, or children of any age who are permanently incapacitated, are considered forced heirs in Louisiana. Puerto Rico, even though it is a U.S. territory, follows Spanish civil law and imposes forced heirship rules. In fact, under current civil code in Puerto Rico, the portion of an estate reserved for forced heirs is 50%.

While testamentary freedom is a given right for most Americans, estate planning can become complicated for those who own property outside the United States. In those cases, local laws and courts in those jurisdictions may override estate planning done in the U.S. and require assets to be distributed in accordance with local forced heirship rules. Careful cross-border estate planning is needed when a person has a residence in a country that restricts testamentary freedom.

Don’t Take Testamentary Freedom for Granted!

This July, as we celebrate the many freedoms we have in this country, please take the time to appreciate the freedom we have with our estate planning options and the right to distribute our assets as we wish. If you haven’t devoted time to your estate plan lately, now is the perfect time to make sure your wishes and intentions for the future are carried out.

Please call the Metro Atlanta-based estate attorneys at Morgan & DiSalvo at (678) 720-0750 or email info@morgandisalvo.com to schedule a consultation.