Opinions sought (inheritance)

In My Humble Opinion
21

My late wife was a wills and trusts attorney. You need to talk to one of those about a “special needs trust”. At least that’s the US terminology.

It sounds like your goal isn’t really to (partially) fund your daughter’s life. But rather to (partially) fund the care of the daughter’s disabled brother in law and crazy sister-in-law. A trust can arrange for that to be the purpose, your daughter to manage it, and include contingencies for things like your daughter and her husband gets divorced or he dies early or …

A thought to consider is to simply fund the trust with your entire assets when the second of you and your wife die. Zero to the two well off brothers, zero directly to the daughter, all to the trust for the unfortunates needing care. That totally solves the “treat your kids differently” problem. The trust can also specify what to do with the trust assets when first 1, and then both invalids have died.

Simply willing money to the daughter leaves way too much to chance. And can subject her to inappropriate pressure from her in-laws.

The truth is your estate of CAD1,5M ~= USD1.1M is large enough that folks used to not much wealth will be sorely tempted to spend from it as if it was infinite, replaceable, or self-refilling. Which it is not. Which spending would rapidly turn your very kind actions into precious water poured onto desert sand. Even if spent solely with the intent of benefiting the invalids, e.g. a paid-for house for them to live in, etc.

At the same time, it’s not very large as endowments for life care go. Especially not split between two invalids. Invested appropriately, it can provide a USD50K-80K total stipend (so USD25K-40K per person) year in and year out to partially fund the lives of the invalids. So your goal is (or at least I advise that it ought to be) to have the income / growth of your principal care for them to the extent it can, but be very circumspect about letting the trustee spend down principal until very late in the invalids’ lives, if at all. It would be easy to shrink the principal through well-meaning spending to the point that the income becomes derisory compared to the cost of care of the beneficiaries. That is a very common, and very bad, outcome. The money runs out just as everyone involved is getting old.


And yes, whatever you do, you need to have some heart-to-heart discussions with each kid separately and all together to come to a plan that works for you without triggering hate from them. I bet you’ll find the better-off ones aren’t too worked up about it. The largest share either brother could expect is 1/3rd which is ~USD350K. That’s a darn nice gift, but it’s not going to move either of their financial needles appreciably.

22

I’m a believer in splitting it equally regardless of the children’s circumstances. I have a very rich sister and a pretty rich brother. The rest of us are doing well but an inheritance from our parents would make a difference in our lives. It wouldn’t make a bit of difference to the two rich ones. Nevertheless, any inheritance will be split evenly to avoid the potential issues. One or both of the rich ones can disclaim their share if they choose to and it will go to the others. But nobody will ask them to or expect them to.

My wife’s parents have set theirs up the same way, though they’re screwing it up by giving the children assets unevenly before they die. They think it’s even but it’s not. For example, they gave her brother land and put an amount equal to the land’s value in an account for my wife. The land produces income now and its value is appreciating, while the money in the account makes a tiny bit of interest. There’s no way to make it even now. My wife has decided that she’ll just accept the situation but it’s causing resentment.

I believe in doing a true, even split to avoid this type of issue. Any assumptions about a particular child’s needs or what the money would do for them is an assumption. Your daughter may need the money more but she may blow it all instead of using it for the purposes you expect. You just can’t know.

23

I understand why you’re anticipating that your daughter and son in law will inherit the care of his siblings and that will be a financial burden but their father is still alive. Is he without any appreciable assets that will support his disabled children after his death?

24

If I were you…

I would split it evenly, three ways. I would tell each child that that’s what I’m going to do.

But let’s say the child with $10M approaches me and says, “Thank you, that’s very generous. But I am quite wealthy, and my sister isn’t. Can I request just a modest inheritance, and allocate most of my portion to her?” I would agree, and do so.

In other words, start with an even split. And if any of them want a lesser percentage, they need to let me know.

25

I’ll just say this:

I am one of three. Two of us have very good jobs. One of us works construction, and went through a divorce that ruined him financially. He’s in his late 40s and basically starting over.

The two of us have made it clear to our parents that we don’t demand equal distribution of the significant but not massive assets, and in fact, an early distribution to the one might make a lot of sense, right about now.

TL;DR: Hopefully your kids have a relationship where they understand the needs aren’t equal, so the treatment doesn’t need to be either.

26

No one knows what the future brings. Are you comfortable having a trust where your money goes to your daughter’s in-laws instead of your kids after a possible future divorce? That may seem impossible to you right now but it really isn’t. It’s one of those tough questions you have to ask yourself.

27

My siblings are all at least comfortably off (I’m sure incomes of over $250k and net worths of over $5M each, including their spouses/SOs).

But two of them are way better off than that. Net worth of many tens of millions if not >$100MM.

In the next generation the disparity is even larger.

The well off ones would be royally pissed if my parents passed away and they either:

  • left everything to charity
  • left more to the less well off children or grandchildren

It’s the more middle class and upper middle class ones who are pushing for them to endow a scholarship or two at the Catholic school they (parents) worked at for many years.

The amounts of money are small compared to the net worths of any of the children. And probably less than the income tax bills of the wealthiest two. But they will trample on the head of their struggling niece or nephew to grab their “fair share”.

I’ve seen it too many times in my extended family already. Not looking forward to it.

28

I’d be interested in hearing the OP’s “guess” as to how each of his 3 kids would react to various divisions of the estate. Say:
33% to each;
70% to dtr, 15% to each son;
100% to dtr.

I may have unjustified doubts WRT human nature, but I’d place odds on anyone getting < an equal proportion resenting the parents, and would encourage stress between the sibs. And I would place higher odds against the wealthier kids disclaiming their interests and giving them to the less wealthy. Not saying no one would act that way - just that IMO most people wouldn’t. Possibly I am unrealistically pessimistic…

We have a sorta similar situation to the OP’s with our 3 kids. One earns well less than the other 2. She is the only one who has kids. We’ve intentionally chosen to not be perfectly identical in our gifting to them. We give them the same sized checks for x-mas and birthdays (in case they ever compare.) But we gift any of them however we wish depending on the specific circumstance. For example, we just gave our son some $ to cover a new home purchase/move, without feeling we have to give identical amounts to the other 2.

What we have done is gift to/for the grandchildren. For example, we set up college accounts for them. In our mind, we never felt a need to defend that to the other 2. If the other 2 choose to have kids (they’ve both taken surgical steps against that), we’ll do the same for them. And we give the grandkids decent checks for birthdays/xmas - knowing the $ will go to fund experiences the family can’t afford - travel, music lessons, etc. And we’ll buy them back to school clothes, etc. Next year we’re taking that family to Disney.

But our wills divide everything equally in thirds. And we’ve already asked all 3 to identify any of our “stuff” they want. Fortunately, they mostly identified completely different things.

So what I’m saying is, perhaps the OP could gift more generously to the daughter now, while he/spouse are alive, in a manner that makes things easier for her and her in-laws, as well as reducing his eventual estate. Then all 3 can get equal shares of a smaller estate. Just a thought.

29

When my great aunt died, she left half her modest estate to my father, and the other half to the children of my father’s sister (my cousins). My father’s sister was very wealthy, and the $50k, or whatever, would have made zero difference to her lifestyle. And we all knew that she’d don’t it on the advise of my uncle (husband of the passed-over aunt), who had been moving as much of their wealth into my cousins’ names as he could, for years, to avoid estate taxes.

But my aunt was really hurt. She had been very close to Aunt Re, and felt the will somehow slighted her.

Anyhow, whatever you plan to do, tell your kids in advance. And if it’s not an equal split, make sure you tell them in other ways that you love them equally.

Our will leaves everything to our kids, but if they aren’t around to collect, most of the money goes to my husband’s siblings. They are working class, and it would make a difference in their lives. My sibs are all comfortably well off (except one brother, who is very rich.) i suppose i should warm my sibs. It’s unlikely to come up, but if they read the will they might care.

30

I think that is an excellent thought.

31

When we inherited we had enough money so the inheritance made no difference to our life. That’s the case for the first son. However, can you give him first dibs at family heirlooms instead of money? That might be a lot more valuable to him than cash which would be a rounding error in his finances.
I agree with most everyone that you should talk about it early, consult a professional, and probably set up a trust to make sure the money goes where it is needed. If life circumstances were more or less equal an equal distribution is fine, but that’s not the case here.

32

Which is why you do it as a trust. And include features to deal with daughter’s hubby dies, daughter and hubby divorce, the invalids die, etc.

If you will the money to somebody, it’s theirs to do as they want, or as they are coerced / guilted into doing.

If instead you trust the money, the trustee is restricted to doing what you told them to do. Which also gives them an out if/when their in-laws, or somebody else, tries to coerce / guilt them into doing something you’d not approve of.

33

Every family is different.

When my father-in-law died, my wife and her sister both signed their share of the estate (it had been divided equally) over to their brother, primarily because he had been the major caretaker during their father’s last years, but also because he was in a financially worse place than either sister. Both my sister-in-law’s husband and I were fine with it.

A few years earlier, my sister and I agreed to shift a percentage of our inheritances to our other sister, who was going through a financially difficult period. We never told her that we had given her a bigger slice, because she would have refused it.

34

Be very careful who you appoint as trustee.

My wife’s parents put most of their assets into a trust and appointed my wife’s older sister as trustee. After their death, she decided it was her prerogative to decide what to do with those assets (despite the fact that the trust document instructions were quite clear that they should be equally divided between the children).

In other words, she completely ignored her fiduciary responsibilities. Illegal, of course: legal actions are still ongoing and we are no longer on speaking terms.

Just a warning from experience…

35

This is the correct answer. My father left me and my brother unequal amounts when he died, but he did not tell either of us, so we found out only after the death certificate arrived at his financial advisor. It was very unequal. So much so that my brother blew a gasket and threatened to sue me and brought up an old will, etc. Dad only mentioned that since I had a family and more responsibilities than my brother, and I had been more involved with he and mom’s care while they were alive, he was “adjusting” things, but never told us what he did. I eventually did some evening-up of the situation but everyone was sore from it.

My advice - everyone expects equal distribution, and if you are not going to do that for some reason, you need to tell them while you are alive, and don’t leave an ugly easter egg for the family to discover after you are gone and have no way of explaining the decision.

36

All that is true , about how when you will someone the money it’s theirs to spend as they wish ( or are coerced/guilted into spending it). Which is why the OP should absolutely use a trust if his intention is take care of his daughter’s in-laws.If he just leaves the larger share to the daughter, she can spend it on herself if they don’t ned her to take care of them. But he might be fine with that - it’s possible that although he says she will be the one who really needs money in the future , what he really means is that she is much less well off than her brothers.

@Dinsdale is talking about something different - splitting the estate equally among the kids and being more generous to the daughter in terms of gifts while the OP and spouse are still alive. Which of course makes the estate smaller - and is probably less likely to cause problems because in most circumstances, no one would ever know that he (for example) paid for an advisor to figure out the best way for daughter and SIL to help the SILs brother and sister. ( That’s going to depend where they live, and if in the US, it will depend on which state.) Or the sons might react differently to the OP paying for renovations to the daughter’s home in anticipation of the in-laws eventually moving in than they would to a very unequal split of the estate.

My plan is for my kids to equally split whatever is left when we go but unless my son has kids real soon , my daughter’s family will benefit more while we’re alive because I have college savings accounts for my grandchildren. But the equally split estate is going to be smaller because of what goes into those accounts.

37

Yes. And if OP gives daughter gifts in this manner, daughter is free to set up a trust for the in-law sibs - if that is what she wants to do. Or she could spend it on hookers and blow. For the OP to set up a special needs trust (assuming they have those in Canada), would be more directly telling the 2 sons that OP considers the in-law sibs more deserving (or whatever adjective) than they.

I was thinking of another wrinkle. I could imagine trying to communicate to the 2 sons that although I was devising equal thirds to each, I would hope that they would consider giving some of their share to their sister, in light of her greater/different needs. I would NOT share that discussion with the sister. That way, it is all on the sons’ heads. If they feel charitable towards their sister and her in-laws, they can be generous. If not…

38

Not everyone. Not by a long stretch.

I’m astonished that so many people in this thread seem to think it’s perfectly reasonable for people who already have way more money than they need to insist on getting more. Have they been taught all their lives that money equals love?

It’s not their money. It’s their parents’ money. The parents can spend it, or they can leave it how they please. I never said a word about how my mother was spending money while she was alive (or how my father was, who predeceased her.) She could very easily have died broke. Are the people who want every penny of “their share” complaining if the parents take a vacation, or go out to dinner, or make a donation to total strangers?

Not more deserving. More in need. Those are not remotely the same thing.

39

Doesn’t matter what’s reasonable; some people feel that they should get an equal share despite need.

40

In my limited experience, I have long since ceased being surprised at how petty and covetous people can be when it comes to inheritances. Doesn’t matter how big or how small the estate, or how wealthy, poor, or “in need”. People fighting over meaningless shit - and bearing significant grudges - and thinking ill of the deceased - for years/decades after. People who didn’t lift a finger when the person was alive, insisting they were not treated fairly. May not happen a majority of times, but I’d peg it at a solid quarter to third.

I agree wholeheartedly. But I could not count the number of folk I have heard discussing their potential inheritance as theirs, before the relative was dead.

But, I might just know a lot of assholes.

(BTW - someone told me they heard that the wealthiest folk in America may not be the most charitable, and may not readily pass up opportunities to add to their wealth. ;))