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Need Annuity advice-brother is foolish with money
Old 10-19-2017, 09:26 PM   #1
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Need Annuity advice-brother is foolish with money

I have two brothers, age 66 and 68. The youngest can not manage money. He is currently temporarily living with our oldest brother and is self employed - his income is sporadic.

He never married, no savings, no pension. If he gets any money it is spent immediately on travel, etc. He has been enabled and the behavior is entrenched.

Our mom allows him to write checks on her account for health care, car insurance, etc.

Our mom is 90. She will leave each us about a million each in her investment accounts, she already has the shares " divided" three ways. Plus some property, etc.

I'm predicting brother will blow through the inheritance in less than five years and want to move in with me and we'll be stuck with his long term care.
DW already said heck no !
I am much younger, plan to ER in a few months, and supporting him isn't in our budget.

I plan to talk to my mom, she is also worried about his future and wants advice. I think he needs a fixed monthly income where he can't spend the inheritance principal.

Mom is in great health, smart with investing, and will probably live for several more years. In addition to her stock investments she has a full pension with COLA, Social Security, large IRA, and lives very comfortably in a modest retirement home.

I'm thinking mom should buy a $1 million annuity that would be his primary share of the assets.
Mom doesn't need another fixed income source but will see the logic.

Oldest brother and I don't get along, he tends to disagree with any advice I give mom, so won't be an easy discussion. Oldest brother is executor and a family law attorney, he wrote her will. He does have a big heart towards #2 brother, they are very close, thus he is a big part of the enabling problem.

Please provide insights and advice on keeping younger brother in at least 25 years of guaranteed income from the future inheritance.

I know very little about guaranteed income investments such as annuities.

Thanks!
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Old 10-19-2017, 09:54 PM   #2
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Might be easier to have your Mom (and lawyer) create a trust that distributes the inheritance out over a period of time instead of all at once.
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Old 10-19-2017, 10:31 PM   #3
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Might be easier to have your Mom (and lawyer) create a trust that distributes the inheritance out over a period of time instead of all at once.


Or tell older brother do whatever you want but when the money runs out itís all on him ? Maybe heíll think twice and come to your conclusion on his own?
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Old 10-19-2017, 10:32 PM   #4
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A family meeting between the 3 brothers. Gently ask helpless brother if he has plans or has thought about it. Ask family law brother if trusts or annuities would be a good thing. Volunteer to tell your plans. "I am going to invest any inheritance and use it to supplement my pension. I have no LTC so I need this reserve." or whatever your plans are. If you get any resistance from either brother, do not escalate. Just make a mental note and back off. After mom passes and bro has spent it all, just say "No, you cannot move in with me. I tried to deal with this years ago but you didn't want to. Family law brother supported you in getting where you are now. Maybe you can move in with him."

Do not go around family law bro and do not get emotional in discussing with family.
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Old 10-19-2017, 10:40 PM   #5
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Let me just add that I have seen many families where one sibling tried to fix things, like you are doing. Or tried to do something that they felt was fair and it created friction among the beneficiaries. Or they brought emotions into dealing with this type of financial situation. It never ends well.

Your only play is to take your share and walk.
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Old 10-19-2017, 11:04 PM   #6
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- I would advise you speak to a couple of folks who specialize in annuities. Multiple insurance guys , that way you can pin one's advice against the other. I would ask about the

As far as setting up a trust ... that might be a better way , for his situation since it sounds like he's going to blow whatever money is in the annuity. If it's in a trust, maybe they can allocate money for emergencies that he can't touch unless it's a true emergency. I might be wrong on this but it's worth looking into. It might cost more up front but might do exactly what you want to happen. Of course you have to deal with whether or not he'll agree to it.
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Old 10-19-2017, 11:43 PM   #7
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My solution is simple... but uses suggestions listed here...


Have mom set up a trust... have it spin off income to brother with the ability to get more money if needed... have enabling brother as trustee...


If enabling brother distributes all the money to brother, then let them work out any new arrangements but tell them to leave you out of that discussion...


See... simple... older brother has an incentive to not have younger one blow it all... and younger cannot without getting older to agree... let them do all the fighting of what is 'fair'....
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Old 10-20-2017, 12:20 AM   #8
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I have a cousin who is in a similar situation; late 60s, financially irresponsible, inherited lots of money and blew through it all. There were multiple intervention attempts by the family but none worked. Eventually the family just gave up and let him sink or swim, and he sank all the way to the bottom, where he rightly belongs. But hey, itís his choice and his life.

The painful reality is if someone hasnít still figured it out in his mid-60ís, he never will. Your brother will more than likely view any attempt to ďhelp himĒ (e.g. setting up an annuity or trust that doles out only a specific amount a year) negatively and resent it as an attempt to come between him and his rightful inheritance. It wonít work and it wonít end well.

I agree with Z3Dreamer. Take your share and walk, and let your brother deal with the consequences of his actions. Heís 66 and old enough. If he hasn't figured it out by now, he never will.

Lucky dude
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Old 10-20-2017, 01:54 AM   #9
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Find out who is the top selling annuity salesperson in your area and set up a meeting with your family. ������
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Old 10-20-2017, 02:15 AM   #10
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I think speeches are wasted on brother #2.

Research "spendthrift trust." You have probably seen those singing commercials to "get your money now." Those are geared for people who are looking to accelerate their annuity payments, i.e. in most cases blow through their money. There are buyers that are willing to help them. So be careful that your brother does not have the power to sell or accelerate his future monthly income.

Look into an institutional trustee.
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Old 10-20-2017, 05:21 AM   #11
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Originally Posted by lwp2017 View Post
I have two brothers, age 66 and 68. The youngest can not manage money. He is currently temporarily living with our oldest brother and is self employed - his income is sporadic.

He never married, no savings, no pension. If he gets any money it is spent immediately on travel, etc. He has been enabled and the behavior is entrenched.

Our mom allows him to write checks on her account for health care, car insurance, etc.

Our mom is 90. She will leave each us about a million each in her investment accounts, she already has the shares " divided" three ways. Plus some property, etc.

I'm predicting brother will blow through the inheritance in less than five years and want to move in with me and we'll be stuck with his long term care.
DW already said heck no !
I am much younger, plan to ER in a few months, and supporting him isn't in our budget.

I plan to talk to my mom, she is also worried about his future and wants advice. I think he needs a fixed monthly income where he can't spend the inheritance principal.

Mom is in great health, smart with investing, and will probably live for several more years. In addition to her stock investments she has a full pension with COLA, Social Security, large IRA, and lives very comfortably in a modest retirement home.

I'm thinking mom should buy a $1 million annuity that would be his primary share of the assets.
Mom doesn't need another fixed income source but will see the logic.

Oldest brother and I don't get along, he tends to disagree with any advice I give mom, so won't be an easy discussion. Oldest brother is executor and a family law attorney, he wrote her will. He does have a big heart towards #2 brother, they are very close, thus he is a big part of the enabling problem.

Please provide insights and advice on keeping younger brother in at least 25 years of guaranteed income from the future inheritance.

I know very little about guaranteed income investments such as annuities.

Thanks!
I wouldn't worry about it and let oldest brother and his "big heart" take care of brother #2 when the time comes.
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Old 10-20-2017, 05:54 AM   #12
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Originally Posted by zinger1457 View Post
Might be easier to have your Mom (and lawyer) create a trust that distributes the inheritance out over a period of time instead of all at once.
Yes!

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Or tell older brother do whatever you want but when the money runs out itís all on him ? Maybe heíll think twice and come to your conclusion on his own?
No. Seen this before. He'll 'yes' you to death and then come begging.
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Old 10-20-2017, 06:02 AM   #13
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Originally Posted by Texas Proud View Post
My solution is simple... but uses suggestions listed here...


Have mom set up a trust... have it spin off income to brother with the ability to get more money if needed... have enabling brother as trustee...


If enabling brother distributes all the money to brother, then let them work out any new arrangements but tell them to leave you out of that discussion...


See... simple... older brother has an incentive to not have younger one blow it all... and younger cannot without getting older to agree... let them do all the fighting of what is 'fair'....
+1

OP, I am sorry you are in this situation. As a reminder, you can only control what you do. As suggested above, give them your suggestion but more importantly, let them know you and your DW will not provide help if the problem is not addressed correctly. Unfortunately, the older brother may like the role of enabler.

FN
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Old 10-20-2017, 06:31 AM   #14
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Let me just add that I have seen many families where one sibling tried to fix things, like you are doing. Or tried to do something that they felt was fair and it created friction among the beneficiaries. Or they brought emotions into dealing with this type of financial situation. It never ends well.

Your only play is to take your share and walk.
This times one hundred, don't even bring up the subject, if you value a good relationship with your brothers keep quiet on the entire subject.

You have already judged your other brother as an "enabler" in fact, maybe he realizes spendy brother is not going to change and deals with that in his own way. Your way will be not to share money with spendy that's your call.It's obvious you don't respect spendy and that attitude is hard to take when discussion like this happen.

I've found making judgements about other family members when you haven't walked in their shoes is a recipe for disaster. If you can't/won't give spendy financial support at least give him some emotional support, his brothers are all the family he has.

As to your Mom being worried about him,tell your Mom to talk to her lawyer and get his guidance.When someone is in their mid to late 60's the chance of lifetime behavior changing is slim to none.
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Old 10-20-2017, 06:48 AM   #15
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Let me just add that I have seen many families where one sibling tried to fix things, like you are doing. Or tried to do something that they felt was fair and it created friction among the beneficiaries. Or they brought emotions into dealing with this type of financial situation. It never ends well.

Your only play is to take your share and walk.
Woo baby do I know about this. Op a quick cliff note version of my experience. only girl of a family of 4 kids. younger brother goes to hollywood, gets hooked on drugs and alcohol blows his prime working years, does get clean and sober but basically has very few options.

almost same scenario, oldest brother always bailing him out, feels that I should support lil bro. yada yada yada. Dad dies, leaves us some cash plus 2 nyc apartments. the real estate worth more than the cash. Since lil Bro is the only sibling still in NY and no one is moving back (I"m in Philly, one brother in Vegas, one brother in Arlington Va) Big brother insist we we give lil bro the Harlem row home. yeah because giving an barely employed recovering addict a home is a great idea. (lol, sorry flashback)

5 years later, lil bro is broke, property taxes in arrears, house torn up AND a bunch of payday loans against it.

Now we are all still pretty close, but my big brother knows not to ask me for anything surrounding this. first I'm pretty salty about losing my childhood home. lol, do you have any idea the value of NYC real estate. second, I cannot be responsible for a grown adult who does not want to help himself.

The only saving grace is that he did 8 years in the Navy right out of H.S so he goes to the V.A for all his medical

Back away from the table. It's horrible and never ends well.
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Old 10-20-2017, 08:04 AM   #16
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If my read on this is correct, 66-year-old bro has already spent the whole $1M in his mind, probably several times over. You are unlikely to be successful in taking any of it away from him. That's how he'll see any attempt to dole it out over time.

I noticed you mentioned you were "much" younger.

It seems to me your concern is that you are going to be expected to support younger bro if anything happens to older bro first. You can try to set expectations now, by telling them all you won't do it, but you're still going to be made to feel like a jerk if you don't.

I don't have the answer. In fact, I don't think the answer will be found in the financial planning field.
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Old 10-20-2017, 08:41 AM   #17
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"Spendthrift Trusts", mentioned earlier, are designed for this.

But no way would I advise that the 'enabling brother' be the administrator of the trust. Talk to your Mom about the situation, and talk about having a bank trust department administer the trust. Then it is in independent, third party hands. Yes, it will probably cost ~ 1%, but that's a small price to pay for the protection it provides, and it is the price he will pay for his 'foolishness'.

I'd also think about having your Mom write up and sign a little document, while she is still able, stating why she is doing this for the brother, and that she does not want that brother bothering the others for money. Maybe this can even be put into a stipulation of the trust (talk to the lawyer). Send a copy to each sibling.

You want to be as far from this as you possibly can. A Spendthrift Trust, independently managed is about as good as you can do, IMO.

I would not procrastinate on this, a 90 YO, though in good health is just at an age where things can change very quickly, and if health problems arise, this is going to be a far lower priority, and may never get done.

As others mentioned, I do think an annuity alone may not provide enough protection, I do think the income stream can be 'sold' for a lump sum. Not sure of that, but why risk it - he might even find illegal means to make that 'sale', at very bad rates.

edit/add: A quick google brought this up, first hit:

https://www.jgwentworth.com/en/struc...l-your-annuity

Quote:
Reasons To Sell Your Annuity

We understand that everyone's situation and reason for selling is unique, but some common reasons for selling your future payments might be because you:

Inherit an annuity and you'd rather receive a lump sum of cash instead of monthly payments ....
-ERD50
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Old 10-20-2017, 08:58 AM   #18
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"Spendthrift Trusts", mentioned earlier, are designed for this.

But no way would I advise that the 'enabling brother' be the administrator of the trust. Talk to your Mom about the situation, and talk about having a bank trust department administer the trust. Then it is in independent, third party hands. Yes, it will probably cost ~ 1%, but that's a small price to pay for the protection it provides, and it is the price he will pay for his 'foolishness'.
This!
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Old 10-20-2017, 09:07 AM   #19
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Your brother would get along great with my sister. And I've learned the hard way that trying to control how a spend thrift sibling spends money never ends well.

I agree with others that your Mom setting up a trust with a third party administrator is the way to go. I wish my parents had done that for my sister before they died. Now I'm left with the mess to deal with.

You don't want to be involved in any aspect of the distribution of the trust. Hopefully your Mom will understand the situation and cooperate.
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Old 10-20-2017, 09:08 AM   #20
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Does anyone think that a 60 something brother is going to accept advice from a much younger brother about how to handle his inheritance?
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