I also wonder if this is a way to control “the girls” from beyond the grave. I also wonder if the parents are of the old school, that men are the best to make the decisions, hence why they are putting their grandson in charge of the trust.
My mom, in her 80’s, finds that many men of her generation are pretty controlling (I’ve seen that also with elderly neighbors). My mom says that many of her friends, the men don’t think their wives are capable of driving and so they do it all. The men also control all of the money decisions, leaving the wife in the dark.
It doesn’t mean the men of this generation are bad, but I am saying that the parents in this case might think their daughters aren’t capable of control since neither are married.
I think that there is probably some input from an attorney or financial advisor to make the estate immune from bad financial decisions by their daughter and to save estate taxes.
@Hoggirl, I wonder if the next time you speak with your friend, you might ask her if she can talk to her parents about hiring a trustee to manage this estate. The other part of this equation may have to do with saving money. My il’s grew up during the depression in not optimal family circumstances. Being thrifty is part of their DNA.
Honestly, this is what I am hoping. But, she read the documents and had a “legal friend” (idk what that means, exactly) look over them.
@doschicos - at the risk of being awfully mean, the daughters are just not bright women. They are not financially savvy at all. Their children - the grandchildren - are far more and better educated. My friend is the smarter of the two.
@“Youdon’tsay” - technically, yes. But, I have never practiced and graduated from law school 25+ years ago. So, as inactive as I can possibly be. I also hold an inactive CPA license.
@CTTC - the parents are both still living independently in their very large home - with stairs! But, the daughters have done much for them through the years as needed. Mom is in better shape at 91 than Dad is at 93. My friend thinks mom is driving how things were set up.
Or it could be because the grandson is extremely capable and they prefer entrusting it to a family member than a stranger. As the original post states, " He is a CPA and CFP and absolutely more savvy with money than either my friend or her sister."
"the parents are both still living independently in their very large home - with stairs! But, the daughters have done much for them through the years as needed. "
Parents help their kids, kids help their parents at different stages of life. I don’t think inheritances should play into this.
Let’s say the estate is worth $6 million. If the income produced by the estate can/will be used to support the needs of the 2 sisters, at 4% interest, that is $240,000 a year. That would pay for a lot and I’d deem that generous.
The more details emerge, the more the plan makes a bit more sense. Not that it’s a structure I’d put into place, but I could understand where the parents are coming from. They are in their 90s and have not only lived independently that entire time, they have two daughters who aren’t very smart, who are bad with money and one of whom they actually had to house - along with their grandchild that she couldn’t support - for years as an adult. Instead of giving the two daughters a huge chunk of money that could be frittered away or even lost outright to a dumb decision or scam, they’re letting the grandson - who they helped raise and know well since he lived in their house when his mom couldn’t support him - retain financial control.
Not so crazy, even if it does create some uncomfortable dynamics.
Coincidentally, my mother just told me that she received a letter from her attorney asking if she wished to revisit the terms of her will, since it has been 8 years since it was written. I told my mother that I was comfortable with it as written, but she asked me to to think it over.
The will appoints my sister and myself as co-executors. Everything is split equally between the two of us. If I predecease them, my half goes to my son (an only child). If my sister predeceases us, her half goes to her 4 daughters equally. (All of the children are specifically named, so we couldn’t add heirs by adoption or something.) I think that’s fair. Additionally, my sister’s husband is from a very wealthy family, and they each have already inherited some money from his parents, and stand to inherit more from the two of them in due course. So even splitting her share 4 ways they will eventually inherit more money than my son does, so they will not suffer from this split.
Some trusts are written such that the beneficiaries get the income from the trust automatically, but the trustee has discretion about the principle. Others are written such that the trustee has discretion over all payments from the trust. Not sure what this one is.
OP, do you want to dig into it, or just empathize with your friend that this was a tough message to get from her parents and move on?
What a terrible “gift” The fact that there is no annual distribution, doesn’t seem to be an equal division by family and having a single person be the trustee could definitely rankle and end the relationships on a bad note.
Trustees should be third parties ( like a bank).
Your friend could speak to her parents and clear the air about her concerns. I would probably do that after asking what their intentions are and why they set it up as they did. They may have been ill advised or have some perspective that she does not.
When it comes to people and money, nothing would surprise me. At all.
Bank trustee can be ineffective and headache. We have generation skipping trusts from 1960’s. The bank didn’t do a good job managing it and the value didn’t increase much over the years. It was very hard to get it out of their hands. Finally, got it freed and it is seeing increase slowly.
Sometimes good intentions go very awry, especially when money is involved. Even though it costs more, it may be useful to consider some guidance for trustee or an institutional co-trustee, to help with sticky questions about what to do when interest and investments aren’t enough and principal may be reduced.
@MomofJandL - this is what I am struggling with. My friend freely offered to send me the documents when I was asking her questions. She even wrote, “Or would that put you in a bad spot?” when she asked if she should email them to me. They are ALL good family friends. The grandpa was a med school classmate of my dad’s. The grandparents have been right by my side through a VERY difficult period in my life. I have no sisters, but my friend is like one to me. I don’t really want to take sides. But, I do feel for my friend. I think I, too, would feel slighted if I were in her situation (as she understands it).
I truly appreciate all the insights shared on this thread. It really is amazing the effect that money can have.
“The men also control all of the money decisions, leaving the wife in the dark.“
@deb922 - this was EXACTLY how my fil was. When he died, my mil had no clue what he (and they) had. My dh had done their tax return for the last 20 years, and fortunately, my fil kept a LOT (too many) of paper records. It still took MUCH to weed through it all. Their entire dining table was covered about a foot deep with financial records he had kept - he kept FAR more than he needed to and refused to do online banking.
All credit cards were in his name, and were thus cut off when he died When she applied for her own credit card, she had to ask my dh what her income was - she had NO idea. She has a nice teacher pension and her SS was actually more than fil’s, yet he definitely controlled all the money. And was tight with it. I think she kind of resents how frugally he made them live.
@Hoggirl Hmm. Well although I have seen many women who let their husbands handle the finances and have no idea what assets they have, this is obviously the downside. If you are a female and don’t know your shared assets is that your husbands fault or your own? I personally think that women who don’t share in the decision making of their finances and allow this to happen have other issues. Not having a credit card in your name in this day and age? Not knowing actual income and living based on someone else’s ideas? Bigger issues for sure.
Hoggirl I’m not commenting specifically on your FIL but bigger picture. It’s important to know what your assets are, if they will be handed down and how and also what assets are restricted. Most financial forms require a signature from both spouses. If you are unsure about something, it makes sense to seek a professional opinion. Burying one’s head in the sand or allowing someone else to control your finances is never a good idea (for anyone) male or female.
I think it’s hard to put a modern perspective on how women of an earlier generation were raised and taught how they were to depend on their husbands to run their financial situations. I think that women raised now have a very different way of looking at things that our mothers and grandmothers never even thought of.
I have a friend in her 70’s who told me very proudly that her husband is very smart and is very up on current events. He reads the newspaper about all of the election candidates and voting items. And then he tells her how they will vote. She was thrilled that he helped her with this!
I was floored, there is no way in heck my husband would even begin to tell me how to vote! I can read and have a mind of my own. That doesn’t always agree with how my husband (or any other person) feels.
But I am of a different generation and have a different way of going about things. So many of my friends who are 10-15 years older than me, never drive on trips. Never go out of town even unless their husband or children drive them. It has always been this way, it’s very foreign to me but I find very common.
Anyways off that point.
No matter how great or well prepared or smart my son is. I would not like it if he had a say in how I spend the money I’ve inherited from my parents. And I can tell you that my sister would be even more upset if my child had control of her access to said money.
My 83 y/o stepfather remarried a few years ago after my mom died. His wife is at least 10 years younger than he is. She recently told my sister that she “just votes for whomever Jimmy tells me to.” My brother had to figuratively hold sis back from going off on poor stepdad’s wife (gave her the “don’t you dare” look).