Grandchildren and Inheritances

[ivinsfan]

I read it this way: 3 adult kids were each getting 1/3. The proposal is that the adult kid w/o kids still gets 1/3. The other 2 adult kids w/kids have to split their 1/3 with their kids, with the adult kids getting 1/2 of 1/3 and their kids getting equal shares of the other 1/2 of 1/3.

With the further info given about the one spouse, it seems that this plan will not effectively accomplish what is desired. It also might alienate kids against the Mom and/or each other. Why should the adult child who didn't have kids get more? Why should the adult child w/o the troublesome spouse get less? Why should any grandchild get more than another grandchild?

Disclaimer: I'm an only child, so no sibling issues here.

I agree with you which is why I asked for more details. Someone is going to be offended with shouldn't be the OP's primary concern as long as she realizes this could cause problems.

 

[dtbach]

Get yourself and your mom to an estate lawyer. They have the knowledge and experience which you don't have. I used one to set up my father's estate and it all worked out great with no hurt feelings after he passed.

 

[sheehs1]

Since my father did not leave things equally to all grandchildren I can tell you grandchildren are smart and know when one gets more than the other, even if they are in different families, particularly if it's a matter that one sibling has more children than another. On the flip side, my mom left things equitably to all of her children and left the grandchildren out. Her thinking was that if we wanted them to have it, we could give it to them.

I like that your mom recognizes that it is fair to leave 1/3rd value to each of her own children regardless of how many children they may or may not have. I recognize your Mom wants to leave something to her grandchildren. So, I suggest you talk to your Mom about leaving an equal value to all grandchildren. Because of the different percentages, she may have to come up with a specific dollar amount instead.

For example: All siblings receive a value of $500,000. Sibling 1 has no children so they get to keep the $500,000. Sibling 2 has two children. Each child gets $100,000 so sibling 2 gets to keep $300,00. Sibling 3 has three children so Sibling 3 gets to keep $200,000.

In this way all of your Mom's children are treated the same in reference to money flowing to each family and all grandchildren are treated the same.

Granted, there is no way to know what the exact dollar amounts will be but perhaps she can pick a dollar amount where there is no worry they it will make or break them. As of now they are all in their 20's, right?

 

[pb4uski]

I would suggest that the grandchildren get their portion over 10 years... similar to RMDs... balance divided by 10 in first year, balance divided by 9 in second year, etc. and remainder in 10th year.

 

[Stormy Kromer]

I've seen family fights of epic proportions lasting for generations over similar circumstances.


The best way to keep peace for generations is to divide the estate equally among the children. If you raised responsible adults, they can decide what it best for their own children.

 

[gwraigty]

For example: All siblings receive a value of $500,000. Sibling 1 has no children so they get to keep the $500,000. Sibling 2 has two children. Each child gets $100,000 so sibling 2 gets to keep $300,00. Sibling 3 has three children so Sibling 3 gets to keep $200,000.

In this way all of your Mom's children are treated the same in reference to money flowing to each family and all grandchildren are treated the same.

For all siblings to get the same value, it has to be left directly to them. It has to be their choice whether or not to share any with their own adult children. Again, no siblings here, but in the above scenario, I'd be Sibling 2 and get $300,000 vs. the childless sibling, who'd get to keep the whole $500,000. I wouldn't be happy about that. My fictitious Sibling 3 wouldn't be happy with either of us. If these facts are known ahead of time, it could materially affect relations between the siblings and their relations with Mom. Just half joking here: Better have Sibling 1 pick out the nursing home.

 

[gwraigty]

I've seen family fights of epic proportions lasting for generations over similar circumstances.


The best way to keep peace for generations is to divide the estate equally among the children. If you raised responsible adults, they can decide what it best for their own children.

+1

Great minds think alike.

It was complicated, but my aunt, uncle, and one cousin no longer speak to me because my aunt felt she should have gotten the bulk of my father's POD assets instead of me. This happened in 2008 and it will never change. I had to deal with the grief of losing my father and having them instantly turn against me at the same time. It made a hard situation even worse.

 

[OldShooter]

F ... Just half joking here: Better have Sibling 1 pick out the nursing home.

Actually that's not always a joke. When DW was working for megabank trusts & estates department more than once a beneficiary would contact her with something like this:

"Mom is getting to be in really rough shape; she hardly knows what is going on any more. What do you think about moving her out of that private room at the nursing home in order to save some money? She won't know the difference anyway."
​

You couldn't make up some of the stuff she had to deal with.

 

[RunningBum]

There is no "right" answer on the distribution.

When mom was distributing among the 3 siblings, 1/3 to each seemed fair, right?

Now she wants to put some to the grandchildren. Maybe it makes sense for each sibling to get the same amount, and for each grandchild to get the same amount. Or maybe she just wants each branch of the family to get the same amount.

Is it necessarily "fair" for the childless sibling to lose part of their share just because mom wanted to send some directly to grandchildren? Especially since it is due to an in-law situation? Maybe it is, maybe it isn't. Mom gets to decide what she wants.

 

[cathy63]

There is no "right" answer on the distribution.

When mom was distributing among the 3 siblings, 1/3 to each seemed fair, right?

Now she wants to put some to the grandchildren. Maybe it makes sense for each sibling to get the same amount, and for each grandchild to get the same amount. Or maybe she just wants each branch of the family to get the same amount.

Is it necessarily "fair" for the childless sibling to lose part of their share just because mom wanted to send some directly to grandchildren? Especially since it is due to an in-law situation? Maybe it is, maybe it isn't. Mom gets to decide what she wants.

Yeah, this. MIL is going through the same thing right now, though as far as I know it's just that the grandkids are now all self-sufficient adults, and not due to any concern about us in-laws. She told everyone that she's changing her will to leave a fixed amount to each of the grandkids and divide the rest among her kids. The previous plan was just to divide it among the kids.

The amount she named for the grandkids is not life changing, for some it's less than their annual salary; and the kids will each get at least 10x that amount, but all of them, including the ones who never had children of their own, will get less under the new plan than the old plan. Still, the unanimous reaction to this change was pretty much "thanks for thinking of us, but it's your money and you should do whatever you want with it, especially spending more on things you enjoy now."

 

[sheehs1]

For all siblings to get the same value, it has to be left directly to them. It has to be their choice whether or not to share any with their own adult children. Again, no siblings here, but in the above scenario, I'd be Sibling 2 and get $300,000 vs. the childless sibling, who'd get to keep the whole $500,000. I wouldn't be happy about that. My fictitious Sibling 3 wouldn't be happy with either of us. If these facts are known ahead of time, it could materially affect relations between the siblings and their relations with Mom. Just half joking here: Better have Sibling 1 pick out the nursing home.

I don't necessarily agree with you if one considers Mom wanted to leave something to her grandchildren without penalizing one of her own children that has no children.

I think the best Mom can do is what she proposed and that is splitting things up into 3rds between her own children. Those that have children will have to share with them. In that way, the initial "branches" of the family are treated the same. And in my scenario, all the grandchildren are treated the same.

Or she can take x amount of dollars and split it amongst the grandchildren. Whatever is left can be divided three ways. But that takes away from the child that had no children and those that did have children ultimately get more money thrown to that branch of the family.

I certainly would not have minded getting less if some went to my own children. In fact, I would totally understand that.

It's Mom money and she can decide.

 

[Sanstar]

The best way to keep peace for generations is to divide the estate equally among the children. If you raised responsible adults, they can decide what it best for their own children.

+1

 

[The Cosmic Avenger]

...my mom left things equitably to all of her children and left the grandchildren out. Her thinking was that if we wanted them to have it, we could give it to them.

That's what I was thinking. I mean, that's how my family has handled it. My parents and grandparents and great-grandparents were actually kind of the opposite of blow-that-dough, stressing leaving an inheritance for their kids. So I think they assume that money left to adult children will probably help the grandchildren eventually.

Anyway, I had the same thought until I got to this response from the OP:

My mom is worried about the spouse of a sibling. That’s what is driving this decision. But she is also aware that it may be a large amount for the grandchildren to manage (especially one from each family)

I worry that my siblings spouse may manipulate whoever has the money (sibling or their kids). But ultimately it’s not my money and my mom will need to do what she thinks is best.

So PandaBear, I suppose this helps her do something of an end-run around her SIL/DIL, leaving some to the DS/DD and some to the grandkids, but keeps the division by thirds that she would have done if just leaving it directly to the three of you. I think it's fair, although IMO it also would be fair to give each of the grandkids equal shares of their collective 1/3. Although then you might have the sibling with fewer kids complaining about how it's unfair. After all "fair" is in the eye of the beholder.

 

[MuirWannabe]

That's what I was thinking. I mean, that's how my family has handled it. My parents and grandparents and great-grandparents were actually kind of the opposite of blow-that-dough, stressing leaving an inheritance for their kids. So I think they assume that money left to adult children will probably help the grandchildren eventually.)

+1. My advice is just leave it all to the children equally. As parents, they will in turn offer benefit to the grandchildren. I certainly feel strongly about this when it comes to my will. No need to skip a generation and overly complicate things if it can be avoided. Maybe in OP’s case it cannot be voided. But I’d certainly try.

 

[DrRoy]

I have had recommended to distribute in 1/3 at 25, 30 and 35 with caveats as you said for need- house purchase, education or medical event I chose 30,35,40 with a small (5k) amount to be given immediately if not yet 25.

The more specific the exceptions the easier it will be on a trustee to administer though you would not want to make the money completely inaccessible in an unforeseen emergency.

I have a niece that received $ from SS because her father had died. I think about $50K. She blew it in about a year. That said, it's only one case.

IMHO, your mom is making a mistake.

I'm guessing the two children don't have the same number of children each. So some grandchildren would inherit less than other grandchildren - based on nothing other than the number of siblings they have.

And her three children are receiving different amounts of money.

Seems completely foolish to me. Still, it's her mistake to make.

If the point is to give money to the grandchildren, all grandchildren should be treated equally. My suggestion would be to give the same amount to each child, then distribute the remainder to each grandchild equally. To me, that's the only thing that makes sense and the only thing that has any chance to avoid hard feelings.


Depending on your relationship with mom, I'd either advise her to distribute to her children only, or just go with her initial grandchildren-distribution plan. No need to be fancy here.

This is a definite pitfall. The fairness issue can cause a lot of grief in the family. I would suggest that if you children do not agree on the distribution then it would be safer for the grandchildren to be left out.

 

[Tadpole]

My dad discussed a similar situation with me before his death. He had come under pressure from my brother-in-law who told him that the rules say that inheritances go to the grandchildren. He was furious because he didn't like this son-in-law and because it would mean that his meager wealth would go 100% to my sister and none to me (I had no children). He wanted to totally disinherit the my sister as well as her husband and children. I told him that that would ruin my relationship with my sister forever. He ended up doing a logical thing. He split it among his children. If my brother-in-law wanted to pass his half along to the grandchildren, it would his and my sister's choice.

My grandmother is another example. She left her meager wealth to her grandchildren which was her house. The house was rented out and the rent went entirely to the maintenance. After her death one of her daughters gave birth to two more children. A family disagreement arose as to the grandmother's true intent. Was it to leave the house to the children she knew or to all grandchildren even if born years after her death? If the latter, then could the property be sold? If not, when would anyone know there would be no more grandchildren. So, if she choses to leave something to her grandchildren that might be shared, as in this case, then she needs to specify which grandchildren.

 

[joeea]

My dad discussed a similar situation with me before his death. He had come under pressure from my brother-in-law who told him that the rules say that inheritances go to the grandchildren.

The rules?

 

[youbet]

There is no "right" answer on the distribution.

That's for sure!

Is it necessarily "fair" for the childless sibling to lose part of their share just because mom wanted to send some directly to grandchildren?

"Fairness" is not the issue in any way, shape or form. The distribution should be determined by the giver's desires and the circumstances involved. For example, the childless sibling does not "lose part of their share because mom wanted to send some directly to grandchildren." What actually happens is mom defines "shares" by naming grandchildren as "share holders." If there are two children and two grandchildren and mom decides to make all equal share holders, then the "fair" share each child receives is one-fourth and each grandchild receives one-fourth.

Whether that's "fair" would be in the eyes of each individual and is circumstance dependent. But it's mom's call. Anecdotal, circumstantial examples can be easily constructed supporting the "fairness" of any of these decisions.

 

[Katiek]

My Mom generally wanted to leave her money to her kids in equal shares. However, later in life she started thinking that she wanted to give something to her grandkids (she'd already provided help for education costs). At this point, the grandkids were all adults and generally responsible with money. I suggested my Mom could set up a new mutual fund account and just deposit whatever she wanted to give in that account and name them beneficiaries (She really didn't want to go to a lawyer and redo her will, since her former lawyer retired and she didn't know one she liked).



Unfortunately, my Mom passed before she had a chance to do anything to accomplish her plan. So two of my siblings and I decided to gift the grandkids a certain amount from our shares and let them know that their grandmother really intended them to have something so that she could contribute to their first house purchase or another significant use. All of them are responsible enough that we're confident they won't use it for something frivolous.



I don't know how much she intended to give them, but we can at least give them something and let them know she was thinking of them.

 

[gayl]

IMHO the estate should be split in 1/4s. 1/4 to each child, 1/4 to all grandchildren divided equally among them.

I did what was stated above. Only the house is in the trust, 50/50 to son & dtr. 3 Schwab accounts (brokerage, IRA, Roth) with TODs. IRA and Roth equally to 2 kids. Brokerage equally to 6 grandkids. Dtr of xDIL no longer inheriting as they were only married 3 yrs and I no longer have contact. Eventually those 3 yrs will be inconsequential in her life. We wish her well but she does not inherit

 

[imnontrad]

Well, she's an adult and so are the grandkids. If they blow the money, they may "get an education" and do better with money going forwards. or maybe they use the money to pay off student loans.
My mother passed away recently and I thought all the grandkids (and great-grandkids) were in the will. Nope, it was a 2 page will dividing the estate equally between myself and siblings. So now I am working on passing some on to my kids and grandkids.

 

[Souschef]

I am in favor of letting the parents of the grand children deal with it. In our case we have four sons
#1 2 adult children
#2-no children
#3 2 adult children
#4 1 minor child
Inheritance will be divided equally among the four

 

[isisdave]

So, the crystal ball is in the shop, and right now I'm guessing that the wife of one of the siblings with kids is the problem.

What happens if one of the grandkids joins a cult, marries someone worse that the current problem wife, develops addiction?

Since so much can go wrong, it might just be easier to leave a third to each child and let them deal with it.

Don't forget to specify what happens if any of the beneficiaries is not alive ... but maybe has children. And/or a widow.

I like 25, 30, and 35, not necessarily thirds. Maybe 25% at 25, 30% at 30, the rest at 35. There's a world of difference these days between kids at 25 and at 30.

You might allow receipt of the age-30 or age-35 amount early to buy a house, maybe with the money being paid to escrow.

 

[piccolopat]

I suggest that your mom consider designating a set dollar amount for each grandchild living at the time of her death, to be paid out in equal amounts over a period of time, perhaps 5 or 10 years. The remainder could then be split equally between her kids. I don't see one sibling getting more than the other in this scenario because some of your mom's estate would go to the grandchildren directly since they are all legal adults and can do what they want with the money they inherit. She might also consider what she wants to happen if any of her kids die before she does or if the grandkids have kids of their own.

 

[RunningBum]

So, the crystal ball is in the shop, and right now I'm guessing that the wife of one of the siblings with kids is the problem.

There is no need to use a crystal ball, or to guess. Just read all of the posts. That seems to be a general problem here. Post #10 specifically.