I would absolutely never do this. First, there might be tax implications. Potentially very costly ones. Second, i don’t want to guilt my kids about taking care of each other. And third, better they resent me after my death than they resent each other. I’ll be dead. They’ll still need to interact with each other, at least some.
I like the idea of setting up a trust and splitting the remainder equally.
It absolutely is their money and they can spend it or leave it as they please - what they can’t do is control how others feel about it. I know two situations where people did what they pleased and were then surprised and upset about how some of their kids felt about it . Yes, it’s my uncle’s money to spend or leave as he pleases. But he accumulated that money when he was married to my cousin’s mother (she’s deceased) and it includes her inheritance from own mother. If he spends all of it on his second wife , I’m pretty sure my cousins will have feelings about it. Another family I know , the parent sold a house that was worth nearly a million dollars to one kid (Suzy, who was not even the least well-off kid) ) for $150,000K. Which she’s not getting in cash - it’s being written off as rent for the mothers apartment. There will be little or nothing for the other kids to inherit. That’s fine, she has every right to do that, it’s her money. But she shouldn’t be surprised when the others tell her to ask Suzy for a ride to the doctor, to take her clothes shopping , to do whatever it is she’s asking one of the others to do.
They aren’t - but if my mother left some money in a special needs trust for my sister’s in-laws, I’d definitely have some sort of feelings about it. And it would be different feelings than if the same amount of money was left to my sister - because my sister and my sister’s in-laws aren’t the same thing. Barring some sort of independent relationship between my parents and my siser’s in-laws , it would be the equivalent of my parents setting up special needs trusts for a couple of neighborhood people they see a few times a year at most. It’s not the equivalent of leaving it to a charity or a friend of my parents’ or of giving it to my sister, who can spend it as she chooses. Even if in the end she chooses to spend it on her in-laws.
Nailed it. This was the case with my brother. While not everyone may expect equality of distribution of inheritance, if someone is left out while others split/get all the proceeds, it will cause tension. Like I said, the person leaving inheritance should talk with everyone about how they are setting things up, and be able to answer questions, and explain what they did and why - while they are alive. Otherwise, the descendants are left to speculate on it all, regardless of who “deserves” what.
I have read all of your posts and thank you. To clear up some misconceptions, I will make the obvious point that I know my kids better than any of you. My older son (the wealthy one) is extremely generous. When his father-in-law retired, he bought a house for him near his daughter. Actually, it was quite profitable. When FIL died he sold the house at a considerable profit. And my daughter is very responsible. She is not going to start spending anything she gets. She knows what the future holds. And I don’t see giving her extra money as going to the in-laws. The way I see it is that will ease her life when, as is inevitable, her FIL dies and her husband will be tasked with caring for his siblings.
I don’t trust trusts. I have a colleague in his 90s who cannot get at the money he was left by his parents without groveling to his ex-wife. He had been an alcoholic and his parents set up a trust with his then wife as trustee and no expiration date.
Anyway, what I just did was write to my middle son, explaining what our wills said (I think we had already shared that information) and asking him that when the time comes he turn over his share to his sister. I assured him that we love him equally, but her needs will be greater. No one will be around to check if he has done this, but I know him well enough to have considerable confidence,
Thanks to you all for your thinking on the subject.
A lot of people fundamentally do not believe this.
When my parents were both having health crises, the wealthiest of their children not only did not show up to help, they also complained about how much money was being spent on my parents health care, home health aides, modifications to their home and finally the assisted living facility that they moved into. One of my siblings referred to this as “cavalier spending of [my] inheritance”. One of them might order something from Amazon or Home Depot that my mother asked for, but would Venmo my mother a request immediately for reimbursement. Someone with probably $50MM and these are $25-100 items. While my parents are in rehab!
Both of these children’s spouses are not just militant about keeping strict boundaries between their finances and my parents, but also between them and THEIR parents. They think it’s more “American” while our approach of filial piety above all is stupid backward thinking from the old country.
Unsurprisingly, their relationship with their own adult children is, er, interesting.
And of course that’s important. FWIW, my sibs and I didn’t have any issues splitting my mom’s physical and ecomonic estate. And I don’t expect my children to have issues, either.
Yes, but a lot of this is proxy for emotions: longstanding issues with siblings, displaced grief, etc. Some is pure greed, of course, but I think in a lot of cases people are surprised by how much the money matters, because they’re unable to see what exactly the money is symbolizing. I had my own experience where my anger was 50% actual injustice, but 50% lifetime of injustice. It was ugly, and went to court. I had expected to be left nothing at all from my grandfather, and I would have been fine with that, but to leave me something and then have the self-appointed executor decide I should get nothing because then more for her… well, I must admit that while I was legally in the right, it was emotions that drove my inclination to pursue it. But we weren’t a healthy family to begin with, which is a different case than the OP here.
I know nothing about Canadian law, but in the US this would not be a good idea. For tax purposes, assets that get passed to a person via inheritance are handled very differently than gifts from one living person to another. I would have a conversation with a tax lawyer to make sure that there are no unexpected consequences from this plan.
And my understanding of US law is that you can’t “pass up” part of your inheritance. You get whatever the will says you get, and then you can give it away, subject to ordinary gift taxes. (Which can be a big deal.)
That’s not the trust’s fault. Your colleague’s parents didn’t think things through when they set it up. I would not have done what you did, but hey, it’s your money. And as you said, you know your kids better than I do. Having said that, I do think that taking into account the widely disparate needs of your kids is commendable.
At least back in the late 90s I think you possibly could. But the law may well have changed since. Back then there were MUCH lower inheritance amounts exempt from taxes. I’m not an estate attorney, so I guarantee I am misusing terms. But this happened when my parents died in (approx) 98.
My parents stupidly did not write wills. I’m going to make up #s here. Let’s say they had $1million, and under the law each person could leave/gift $300k tax free. For a couple, that means $600k. So only $400k of their estate would be taxed.
My mom died, and now my dad owned everything 100%. He realized that out of their estate now only $300k would be tax free and $700k would be taxed. So we hired some lawyers who did what ever it took for him to disavow his right to some portion of his dead wife’s interest in their property, such that the $300k from my mom went to their kids and he only owned $700k.
Here is where it gets interesting IMO. Dad died 1 month after mom, and before his disclaiming of her interest was completed. But that was no problem. The courts allowed the disclaiming of his interest in the $300k even after his death. So $300k came to us tax free from mom, then $700k came to us from dad - with $300k tax free and $400k taxed. Just a pure and simple tax dodge, and no one raised an eyebrow.
Again - made up numbers. And no attempt made to look up all the correct terms and applicable law.
Also, since they did not have wills, any estate was passed per stirpes. So whatever interest of mom’s that he disclaimed was distributed equally to the kids… Not trying to figure out at the moment if that would work the same under a will - whether any disavowed property would be divided among the other named heirs…
Not sure how relevant this is, but it might be. Good reason to get a good estate lawyer involved - which I definitely am not.
If you don’t want all or part of an inheritance, you can disclaim it. You don’t have to take anything you don’t want. However, you can’t specify what happens to the inheritance you don’t take. It goes back into the estate to be distributed as if you didn’t exist. In the case of one heir disclaiming money, that money goes back into estate to be distributed among the other heirs. The executor is still bound by the directives in the will. The executor can’t come up with distributions on their own, like giving 100% of that disclaimed share to a specific heir. The disclaimed share just goes into the estate assets to be distributed as directed in the will to the other heirs.
Sorry - I did not see your reply when I posted.
I respect your privacy, but have you even generally indicated WHAT your wills say? Are you leaving all 3 equal amounts, or are you leaving more to your daughter.
And you wrote your middle son but not the oldest? Are you cutting him out completely?
Like you said, you know yours best, and can do whatever you wish. And perhaps I missed something.
I concur with those who advise getting advice as to the tax implications of conveying via will or after. The difference could be considerable.
Hey - I wasn’t as off base as I feared I might be! You know what they say about a blind squirrel… 
I think you can - at least in some parts of the US. I’m not sure exactly how it’s treated ( as if the disclaiming heir died before inheriting or as if they never existed) but what I am sure of is that I can’t disclaim an inheritance and choose who gets it instead.
I agree with those who said the daughter who has the greatest needs should get most or all of the inheritance while the others need little or none at all. If the other two are willing to agree and are okay, then it sounds pretty simple. If they don’t, then there will be hard feelings but I still feel you should do some sort of 10-10-80 percent split or 0-0-100.
I see on re-reading the OP that your wills say equal shares to all 3. But I read both of your posts and do not see where you asked your eldest to give his share to your daughter. Just curious that you twice mention asking your middle son to do so, but do not mention asking your eldest the same.
And why not simply re-write your wills? Doesn’t have to be a big, expensive deal.
Again, you know them best. And letting FIL live rent-free is generous. But IMO the generosity is somewhat tempered by the fact that this was an astute investment decision.
For everyone’s sake, I truly hope they continue to interact as pleasantly once they learn of your wishes - however you convey them.
Sorry I’m such a downer here, but several times I have seen people whom I liked, respected, and thought I knew, act in a manner I considered completely out of character when it came to their parents’ property and estates. (Of course, far more common is the relative whom you suspected of being an asshole proving your suspicions to be spot on.)
I could be wrong, but I’m reading it as the oldest son is the middle child and very wealthy and the daughter is older than her brothers.
For the best chance of the kids’ relationships staying good, split it 3 ways. That way there’s the least chance of hard feelings. If one of the richer kids feels like being magnanimous and giving up their share, then that’s their choice. One thing to also be concerned about are the spouses. One of them may not be as agreeable to an unequal split and may make things difficult.
If this was in the US, one option would be to designate a certain amount to go into a 529 college savings plan for the daughter’s child. It doesn’t matter if he goes to college or not. If he doesn’t go to college, the parents can change the beneficiary of the 529. The daughter could change the beneficiary to herself. If no one goes to college, the money in the 529 plan can be rolled into an IRA retirement account for the daughter. I’m not sure if Canada has something similar. If it does, this could be a way to shuttle money to the daughter with the minimum potential for hurt feelings. You could specify it as something like “I designate $100k or 10% of my estate, whichever is less, to go into a 529 plan for daughter’s child. The remainder of my estate is to be split in equal shares among our children.”. Most people would be more agreeable to that rather than specifying “Daughter gets an extra $100k or 10% of the estate.”
I wouldn’t set up anything official for the in-law siblings. There are too many unknown variables which could greatly complicate your daughter’s financial and emotional situation. For instance, sister-in-law could sue your daughter for control of assets because she says they’re being mismanaged. It’s great that you’re concerned about them, but don’t saddle your daughter with responsibilities which could bring her a lot of headaches.
Of course you know your children better than any of us. But boy if I was him I’d be pretty quick to give a call and say “no thanks dad. Please don’t put me in the middle of this. It just complicates my life needlessly. Even if there aren’t tax impacts.”
Trusting a trust is contingent on the trustee chosen. If your daughter, and your wishes regarding most possible contingencies are made clear, then it is a different thing than a bad trustee or no directions left. Not saying you should do that but your son sounds smart enough that he may be suggesting it rather than be placed in the position you aim to impose upon him.
The more I think about this, the clearer the answer seems to me. Have a family meeting with all of your kids. Include their respective partners if you want (I would). Lay out for them your thoughts, including your assumption that your daughter’s in-laws will require more resources in the future. Ask them for their opinions and input. If your kids are as reasonable as you seem to think they are - I’m not casting aspersions, but an attorney-friend of mine once told me you don’t really know somebody until you share an inheritance with them - you should all be able to come to an agreement in principle about how the estate should be divided.
After you have all come to this agreement, meet with an attorney who specializes in estates, wills, and trusts, not a general practice attorney. Describe in excruciating detail what your family agreed, and have that attorney draw up documents that reflect your wishes. Make sure you ask the attorney to punch holes in your plan any place they see them. Review the docs with your kids, get their buy-in, and execute them. Revisit those docs annually, whether you think you need to or not.