To the OP, I'm sorry that your own child has treated you like this. All I can say is that as I have learned more about human behavior and psychology over the years from personal experiences, I understand that virtually every family has issues. Have no qualms with treating them just as they have treated you, and set up your estate accordingly. However, double check and make sure everything is as lock tight as possible, because money can make people to strange things. And even larger sums can make them do even stranger things.
My quandary- the thought of one dime of my parents money going to and being spent by someone who holds us all in disdain riles me up. Am I being vindictive or prudent to have set up my will to give half the estate to our close child and the other half divided among the grandchildren (who we don't even know?).
One thing to keep in mind (which I didn't see other posts mention) is that if you do leave money to the grandchildren of the estranged child, that could create a host of issues. Would the money go outright to the grandchildren in one lump sum if they are minors? If so, the estranged son/DIL would undoubtedly wring their hands around it and do who-knows-what with it, and could use the excuse that it was for the benefit of the grandchildren.
If you create a trust to hold the grandchildrens' funds until a certain age, then the estranged child could challenge/contest it on a number of grounds. If you allow the trust to disperse money "for the benefit of the grandchildren", then estranged child would likely use a number of excuses to get money withdrawn from the trust...."for the grandchildren's benefit".
Perhaps one way is a way my grandparents used - if you are going to purchase savings bonds for yourself anyway, put grandchildren's names on them as either co-owners or beneficiaries. Then, you can instruct the 'good child' to not mention the existence of hte savings bonds until the grandchildren are of legal age (perhaps a little older and more mature, say 25?). That way, estranged child has no way of getting their hands on the savings bonds that would legally be in the name of the grandchildren at that point.
I know you said you were living off of the dividends of your portfolio, so this may be a somewhat limited way of dividing up your estate.
Money can be a very frustrating thing - my own father tried to screw my siblings and I out of our share of my grandmother's estate with a stash of cash in a safe deposit box (my grandfather was old-school, and lost money in a bank in 1929 when he was a young 11 year old paperboy). My father thought no one knew what was in the box, but luckily, my grandmother entrusted me with all of her investments and holdings several years before her death, and I took an inventory of the box with her a while back.
After grandmother's death, my dad went over her assets to disperse. Someone asked about the existence of a safe deposit box at a certain bank (the one w/ the cash, but no one else knew what was in it). Dad said "it just had a few papers" and quickly changed the subject. The safe deposit box was asked about again later on by another sibling, and after dad again said "it had nothing in it", I said "BS, it had about $50k!", to which he quickly said "no, it only had about $10k".
All of my siblings have an unhealthy, fearful relationship with my dad, so no one bothered to bring him to task about insisting it had "just a few papers" to suddenly admitting it had $10k (it actually held $40k in cash, as my memory was just a little fuzzy). I can only assume that my dad hoped no one would ask about the safe deposit box, and he would simply take the cash as his own and put it in his own safe deposit box.