Inheritance and remarried sibling?

I hope to get people’s thoughts on how to handle this and how to think it thru. I’m single, no kids, never married. I have 2 brothers, we’re all 60ish. Unfortunately I have an illness where the median life expectancy is about 10 years, so planning for what happens when I’m gone isn’t a “yeah, happens eventually to all of us someday” but a concern.

I have set up a will and living trust dividing my assets evenly between my brothers. I live in CA where real estate has gone up a lot in the last 30 years, so leaving my house to my brothers would be a significant sum for each (probably a million or so). Both brothers have children, so my hope is that my estate would both help my brothers and allow them to make gifts at their to their childen at their discretion. And in any event I figure my brothers and their wives would leave their estates to their children, that estate including the residual of my gifts to my brothers.

One of my brothers recently remarried, a woman who has grown children just like my brother. And I’m happy for him, he worked hard after his divorce to meet someone again. Maybe if I’d done the same I wouldn’t still be single :wink: But I have some reservations now about passing along my inheritance to this brother. When I’m not here I want both my brothers to benefit from what I haven’t used but…

If we were all younger and he remarried a woman with children and took part in raising them then I’d be ok with them inheriting from my estate since he would have been a part of their life even if he didn’t adopt them. But these are grown children that I’ve never met and who I imagine could only consider my brother as the 2nd husband of their mom but not really anything other than that. It bothers me that they could inherit hundreds of thousands of dollars from some guy they don’t even know (the brother of their mom’s 2nd husband), money I’d prefer go to my actual niece/nephew.

So to my questions and request for advice.

  • Am I off base here?
  • If not, is there a way to set up my estate so it passes to my brother and then the residual to my niece and nephew?
  • Is it crude/rude to ask my brother about whether him and his new wife have a prenup, or what his plans are for his children in regards to inheritance?

I don’t have advice about how to set it up, but I don’t think you are out of line to feel as you do. I assume an attorney can make it happen, and someone on CC is sure to have helpful advice in this regard.

1 Like

Your concerns are what YOU feel and what YOU want. It makes sense to want to leave things to folks who matter to us rather than someone who is pretty much a stranger to us.

You can talk with an estate attorney (often the initial consultation is no charge) about your thoughts and concerns and get his/her insights on what options could provide what you would like best.

One option you may wish to consider (depending on your relationship with your nieces & nephews you have a relationship with) is perhaps giving them gifts that they can contribute to their retirement account (if you have cash and are so inclined).

1 Like

We just did our wills so this has been top of mind for me.

One, I absolutely don’t think what you are feeling is out of line or unusual. Our lawyer had us do one thing that I know is intellectually right but felt difficult emotionally. In time, I think we’ll change that one thing.

Two, I’m not a lawyer, but what you’re asking absolutely is possible, if I understood our lawyer correctly.

The main thing that comes to mind is that your money is just that, your money. You get to decide what to do with it.

One small issue is that if you leave an inheritance to nephews and nieces rather than to brothers then estate tax only sets in once, rather than twice. However, this depends upon the estate tax rate and your brothers’ estate sizes in addition to your own. It is very hard to know what estate taxes will be in ten years, and even harder to know what they will be when your brother’s die, that could be many decades away. This would however give you some control over which nephews and nieces receive the money.

One option is to give it to your brother’s equally and then trust them to do with it whatever they want to do with it. Another option is to give it to charity. Another option is to put it into a trust fund with specific guidance – but this just creates the question of what guidance to give.

In my case I have children (which you might guess from my screen name) but this does not really change the issue all that much. My children are likely to get married at some point. Then they might have kids. Then who knows what might happen next. If one child were to get divorced at some point (I am only speculating) then how do prepare for that in our wills? If one child of mine / one brother of yours had more children, do you split the money equally between children/brothers and unequally between grandchildren / nephews & nieces, or equally among the next generation?

We have been thinking about this for a while and it still makes my head spin.

3 Likes

Here’s an article that talks about some of the wrinkles.

1 Like

Definitely recommend an estate attorney. Both for your concerns regarding your newly remarried brother and for possible changes to the estate and gift tax laws, in particular loss of step up in basis (which would impact your real estate bequests in a terrible way ) and reduction of the gift exemption that are being discussed at the federal level.

Trusts are often useful devices to accomplish what you seek. For example you could leave assets in trust for your brothers and they’d receive the income for their lifetime, then to their spouse and then the principal would go to their kids when they pass away.

2 Likes

You have no reason to feely guilt or embarrassment in the exclusion of unknown parties receiving your hard-earned funds.

Our attorney had us fill out a questionnaire prior to meeting with him last year during Covid.
The questionnaire covered EVERYTHING, including a question that, I’ll paraphrase, was really tough: “Who can come out of the woodwork to possibly contest your Will and Trust?”
I was so impressed by the questionnaire and how he asked us to list our preferences, for family members’ division of assets, in percentages.
You need to find an attorney with significant experience in Trusts and Wills.
We found our attorney via our wealth manager who had 3 recommendations for attorneys. We were fortunate to luck upon this referred attorney and his phenomenal staff.
The attorney included an “add-on” page, whereby we could “add on” new assets and designees and date/record these in the Will binder then meet later to formalize the additions.
A good attorney will make the process smooth and account for possible future changes, to the advantage, of selected family members.
Statements like “intentionally designated for ________ family member”, “related by blood”, “purposely excluded” are some of the terms included in our Will and trust.

1 Like

An estate lawyer can help you with this. Of course, to the extent your brother gets distributions from any vehicle, there is nothing stopping him from spending it on his step family. (And ime, this can make them feel like it should be theirs when he’s gone. Been there, done that! So a lawyer is your friend!)

If you are looking for a simpler approach, you could just divvy everything up between your brothers, nieces, and nephews up front so that there’s less for your brothers to potentially pass to step kids. This is straightforward and is unlikely to miff your brother’s new wife and kids.

Having participated in a contentious estate distribution, I have become a fan of trust agreements that are quite explicit in terms of who gets what, even after the first recipient passes.

7 Likes

My best friend married a man with 3 young children (they are all grown with young kids of their own now) and they never had children together. She wants her assets to go to her nephew, not her husband’s kids. They went to a lawyer and had a will drawn up that stipulates something to the effect of when the second of them passes, the estate gets divided in half with one going to her nephew (through her brother) and the other being divided equally between the other 3.

I think your situation is a bit less complicated. Estate lawyers have seen EVERYTHING and will be able to craft something that satisfies your needs. My thought is maybe skipping the brothers (or leaving a set amount to each) and leaving the rest evenly split among the next generation, specifically listing each biological relation by name.

4 Likes

We just set up a new trust. You can set up your beneficiaries however you want. But if you leave half to your brother, he gets to decide what happens to that money and if there is no pre nup, it can go to new wife’s kids.

IMO this is a reasonable question to ask your brother before jumping through hoops with an attorney. He may have already set up his estate to take care of his own children first.

2 Likes

What ages are your current nieces and nephews? You could just leave the money to them in trust until they turn 21 (basically skipping over your brothers). This can get complicated. My brother-in-law had an aunt who had no children of her own and left her estate to be split among a dozen nieces and nephews. For some reason this made things complicated (I think in that instance, the problem was she hadn’t explicitly put aside money for her funeral expenses to come out of the estate first).

If you leave the money directly to both of your brothers, then they get to decide what to do with it. They could leave it all to charity – even a charity you don’t like – or to their alma mater. It’s a gift – and once you’ve given a gift, you have no say in what the recipient does with your gift.

If you want the money to go to your nephews/nieces, then you need to have your will say that specifically. It could be set up in a trust, so that your brothers receive the income from the trust during their lifetimes, but you definitely need an estate attorney to set this up correctly.

7 Likes

My uncle had 6 kids. He divorced and remarried. My uncle died 20 years ago. He left his money in a trust to be used by his wife and when she dies the remainder goes to his kids. The problem is that then someone has to administer the trust. His wife is still alive so for twenty years someone has to make financial decisions, file taxes, write checks, etc… for the trust.
I just finished my will and trust. I put what I inherited from my dad in a separate trust, and when I die that money will go directly to my kids. Then my husband and I have a trust with our joint assets.

Who knows whether in the next 10 years you will get to know the ‘new’ kids and want them to share in your estate? They might be the greatest kids of all time, and you might like them, their kids, their dogs, their life goals.

But I think once you give the money you have to let go and not worry about what happens 20 years from now. If you want the money to go to nieces and nephews and not stepchildren, leave it to them directly.

And I agree with asking your brother if he’s already done all this estate planning.

1 Like

The family trust I have (from my parents) was set up so that when I die it goes to my kids. Period. H does not get anything. My parents requested this (same for my sister and BIL) because they knew a couple where the second wife got everything (and gave it to her kids) and their own kids ended up not getting a dime of the money both of their parents worked hard for.

5 Likes

Consult with an estate attorney and discuss putting everything into trusts. There are such things as generation skipping trusts so that the inheritance will go to your brother’s children.

It is common in these situations that others will make stipulations in their estate planning to exclude the adult step-children. I’m sure family on your brother’s wife’s side are thinking the same thing.

And it is very kind of you to want to make sure they are taken care of after you leave this world.

4 Likes

My parents have their will set up that divides everything between my two brothers and myself. If one of us is not alive then the will states the assets go to our children and not to our spouses.

3 Likes

One more thing—medical predictions about impending death can be very wrong. I and two other very close friends were given death sentences due to medical conditions over 20 years ago. We are still going strong today, so never discount how long you may live in spite of dire medical predictions

14 Likes

I don’t think you should ask your brother about his will or whether he has a prenup. Not if you want to have good relations with him. He could see this as your not approving of his new wife. It doesn’t matter anyway. He can re-write his will or void his pre-nup as he chooses.

You never know what could happen to your money if you just divide the estate between your brothers. He could have a dispute and disinherit one of his kids. He could leave the money to his wife, who could then re-marry, die and then her second husband gets all the money. The permutations are numberless.

I agree with the other comments. Give some to the nieces and nephews you know. Let your estate attorney know your concerns and re-write your will to address those concerns.

6 Likes