I suppose what one does depends on her personality. I would take the bull by the horns, trying to address the issue diplomatically and civilly. I might do it with each parent individually to see if mom and dad had the same ideas.
Regarding #98, and “if he needed it”:
When I was investigating how others had structured their estates at the behest of my mom, I came across some advice that made a lot of sense to me: The estate attorney counsels his clients not to “punish” a more successful heir, as many things (medical issues, accidents, etc) might change that - not only after the creation of the documents, but after it’s too late to update.
The other thing is that folks CAN refuse bequests if they choose to. For example, H was bequeathed 1/2 of his sister’s share of her dental practice that she had with Her brother. H and I agreed BIL should have it 100% so H refused that bequest.
Money is a tricky thing. I don’t have any answers. I believe my folks are leaving everything just to their children and nothing to the folks they married and grandkids. Not sure how they’ve handled what to do if any of us die before they do.
As far as I know they’re leaving everything directly to each of us and not in trust.
Trusts certainly have both good (tax saving & some creditor protection) and bad (expenses & more complexity) aspects.
True. No one can predict the future. Spendthrifts, gamblers and drug addicts who get cut out by reason of those bad behaviors can reform. The responsible person can become irresponsible with money in any number of ways. And after you’re dead, you’ll never know what became of your hard earned money. You can only hope to control how you’ll be viewed by your children or those who inherit by writing a fair will. Whatever your definition of ‘fair’ is.
The D’s have NOT been “cut out”. That’s factually incorrect. Cut out would mean that the dough gets divided among the living grandchildren with zero going to the adult children . That is neither the parent’s intent here, nor is it what has been stipulated according to what the OP has been told. I don’t know why the “glass is half empty” crowd is assuming that the D’s are being denied their inheritance. Presumably, they could be living MUCH better (financially) once the parents are gone then they are right now- and perhaps there’s a message there as well. Prudently managing the investments and the D’s living off the income while preserving the corpus is a time honored way of handling an estate of (what we think) this size. And it’s only two heirs-- it’s not as though the trustee has to split $20K 8 ways every year which really is a pain and not worth the hassle of setting up a trust.
Is that unusual? I would think it the norm for “money follows blood” as @TatinG has stated from her mother. Is it even that normal to give money to one’s adult siblings over one’s offspring?
We have a token amount going to nieces/nephews and siblings (except for one who was intentionally left out for being a true PITA). Some amount for charity. The vast bulk of our assets goes to our children.
Exactly. As I stated before, an estate of $6 million can conservatively through off $240,000 in income per year without touching the principal. That’s a fair amount of money to spend on 2 people.
My fil’s parents had a GST. Mil knew about it, but, again, I don’t think she knew how much was in it at all. Fil was the trustee. It wasn’t a vast amount of money, but not insignificant. It was to be used as fil saw fit for his lifetime and any remainder split at his death between my dh and his sister. He spent down some of it in between their passing and his own. My dh did the tax return for that trust as well. I think their setting up this trust bothered my mil as it was established after she and fil had been married 25 years. But, fil’s parents definitely wanted their money to follow their blood. Had that money gone outright to fil and then gone outright to mil at his death, she could have remarried, spent it all, cut out dh and his sister - whatever. Fil’s parents didn’t want to take that risk.
The reality is that anything left to anyone might not wind up staying in the “family.” Things like a GST can preserve that blood line, at least for a little bit longer. If my Dh predeceases his mother, his share of her estate would go to our son. This is a typical arrangement when the grandchildren are adults, I think. It would be different if there were no grandchildren, though.
@doschicos, I don’t know what is usual. I was just surprised that seeing as how she was their son’s life partner for more than 40 years that they wouldn’t acknowledge that in the will. I also think about my dh and what an amazing SIL he has been to them. I would hope that relationship would continue if I were to die, and, if so, that they would take that into account in the will.
Maybe a difference would be that we “gave” them grandchildren whereas my brother didn’t. I would hope that all those relationships would be acknowledged, but as my mom has gotten older I’ve seen this kind of stingy side of her, especially where my SIL is involved. I think she doesn’t care for her all that much and only recently has let that be known.
People do interesting things, that’s for sure. My parents, who would be in their mid 90’s if still alive, left their very modest house to my sister in their initial will. They told me it was because my sibling was not married and I had a spouse! Meanwhile, my sister lived with them , paid no rent, and worked full time. We had two kids and a mortgage. Their will did leave things equally to she and I after that but there was not much left anyway. My mother actually deeded the house to my sister after my father died.
My sister has been able to save much more money than we have and is quite comfortable. Luckily, she made things right and it did not end up coming between us. Some of that kind of thinking by my parents was probably common in that generation.
I cannot answer the question of how common this practice is, but I will say that my parents did this several years ago and I am so glad that they did! Neither we, nor my sibs really needed the money and it would make no difference in our ability to retire comfortably. We all remember the years in our 20s when we budgeted and struggled to save. To the six grandchildren who split the inheritance it was a marvelous gift that will jumpstart many things! The oldest was able to leave a job that he struggled with for moral reasons to start his own business, a niece who was divorced with a child was able to buy a home in an excellent school district, two others are in medical school and the final two have invested theirs. I am certain that my parents would smile broadly to know the good that has come from this unexpected and generous gift! My son named his new baby after Grandma!
Agree that they have not been cut out, but it sounds like at least one of them is not sure what she has. Does she get the income, or more than the income, or less than the income? Is it all at the discretion of her son, with no other guidance? She doesn’t seem to know what to expect. Can she spend the corpus if needed, say for long term care?
Trusts sometimes leave it up to the discretion of the trustee instead of making distributions mandatory to help protect the money from creditors, but it may not protect the beneficiary from the trustee.
I’m waiting for evidence that ANYONE needs protection from this trustee- whose only crime right now is that he is the “golden boy” AND has a background in accounting/money management. It might feel ghoulish to ask the trustee “So when Grandma dies, how much do you plan to give me to live on?” (since presumably when grandpa passes, the money goes to grandma and nothing goes on to the heirs). But it’s not out of line to ask your own parents “What is your intention, and how do we best fulfill your wishes once you are gone”.
Maybe they tell you “once you stop pouring money into that Lucille Roberts franchise you bought 20 years ago which is sucking you dry financially we’d be prepared to loosen the purse strings”. Or whatever. But they “mystery” of “how much will I get” is going to be a mystery in ANY case. Grandma and Grandpa need money to live on, and if THEY are the ones who end up draining the assets during their lifetime, there’s less to distribute.
It’s not 'how much money will I get". It’s ‘am I going to get an income’ from the trust? Is it at the sole discretion of the trustee? Is it a percentage of assets per annum? Is it spelled out that the capital must be invested so as to produce a certain percentage return? The trustee could invest the capital in a long term asset (like unimproved property, for example) that would produce no income for the trust at all. The trust seems to be vague.
“The trust seems to be vague” because the OP really has no clue what the will/trust really involves for her friend. It could be that the friend and sister are very well cared for with all this.
I think a lot of people are concerned not because the trustee has any ill intent, but because the terms seem to not put many checks and balances over this one individual. It seems the grantors intend for the daughters to benefit from the trust, but they’re counting on a personality to ensure that happens rather than setting the trust up in a way that provides for it. Whether these are unintended consequences or not, I can’t say.
Not trust related, but my mother had an annuity investment with very ambiguous wording about whether there would be a guaranteed period of payouts to beneficiaries after her death; seemed like everything would revert to the institution. I’d known about this for a couple of years but wasn’t going to cold-call her about it. Once she raised a conversation in general about wanting me to inherit whatever assets she had left, I brought up the terms of that account. She had misunderstood how it worked when she opened it around ten years ago, said there was no way she wanted it to work like that, and closed it at the next opportunity.
TLDR Sometimes people don’t mean for a contract they’ve signed to work the way it does.
It does seem strange to not give at least some token
We don’t know this. Details are sketchy. I doubt OP’s friend really understands what she is talking about in terms of details from what has been put forth here.
No one should anticipate or count on inheritance of any kind. Just think of it as gravy if and when you do get it.
The consensus is that the old folks are smart enough to amass a 5-7 million dollar estate but too stupid to stipulate how the trust should be invested, overseen and managed? Not buying it. None of us have seen the trust language, and the OP doesn’t know how many guardrails have been set up here.
I’m not willing to be that the old folks are that dumb. And their D’s don’t understand how the trust is going to be adminstered, because in the OP’s view they aren’t the sharpest crayons in the box when it comes to money. That does not mean that the grandson has carte blanche to invest any way he wants, or to raid principal for his own benefit when and if it suits him.
I know some well-to-do people with adult children who for whatever reason have needed support (financial, legal, emotional, medical) into their 40’s and beyond. I also know that this tends to keep the parents up at night. What happens if. Who will take care of once we’re gone. How do we know.
There’s zero evidence that the old folks have ill intentions here, are stupid, or are being churlish with the trust.
I know a situation where quite affluent parents died and left one trustee-- their youngest child- who professionally speaking was the least qualified to administer a rather large estate. No experience in accounting or finance, only vague understanding of how money (especially large amounts) worked.
But this was the adult child in a long term, stable marriage; no known medical or psychiatric or substance issues, and humble enough to ask for help when needed whether lawyers, investment advisors, tax experts, and an auction house/appraisers to take care of the “stuff”. Siblings were pissed- they knew more (and it’s true, they did). But they had “baggage” to put it kindly, and significant others who would have put pressure on them as trustees to maximize short term payouts over long term wealth preservation, and even some funky ideas about splitting up the “stuff”. (“everyone should just take what they want and we’ll donate the rest to charity”. Which sounds like a good idea, except there was a work of art worth 7 figures which everyone wanted- and nobody got- the trustee sold it at auction and split the proceeds evenly; and the rest of the “stuff” netted them another small fortune, again, once liquidated.)
So sometimes the least obvious choice (the egghead who doesn’t care about or know about money) is the wise choice- since that’s the heir who will ask for advice from the experts.
Again- how is this a bad deal for the sisters???
The emotional part is that it is a surprise to their sisters. At least one feels hurt and not trusted by her parents.
The legal part is that a lot of otherwise very smart people are intimidated by lawyers and legal jargon. Also by Financial Advisors and money talk. They can be nationally recognized medical researchers, but be unclear about how the trust operates and embarrassed to ask questions. We don’t know this is the case, but we don’t know it isn’t. i know of several medical professionals whose confidence exceeds their competence in financial matters.
Of course no one is guaranteed an inheritance. We know we should expect nothing and be grateful if we get anything. But people have feelings and emotions, and feeling like your parents don’t trust you to handle their money after they are gone can hurt, even if they have good reason to want some safeguards in place.
And the uncertainty of OP’s friend about whether there are any restrictions on the trustees discretion is further dispiriting.
Financially, this might work out quite well for OP’s friend. But she’s lost and hurt now. OP could offer to read the trust documents and try to fill in some of the missing facts, or could decide just to be a safe place for the friend to vent.
But… isn’t that also the one that wasn’t able to support herself and her kid, so the parents had to at least partially support as an adult? It’s not the end of the world to need help from parents, but it also then shouldn’t be a huge surprise that those same parents have some doubts in the back of their mind about your ability to support yourself or make good financial decisions going forward.
Just like it shouldn’t be a huge surprise that the one grandson is “golden child.” After all, he’s the one the grandparents spent most time with because he was living in their house and they had to help raise him. Of course they have a close bond and believe they understand him and his capabilities.
None of this is hugely surprising to an outsider, and I suspect if the daughters are surprised that’s less to do with the grandparents’ actions and more to do with a lack of self awareness.