Adult Children Inheritance

[Raygun99]

Looking for opinion? My DWs Mother passed away and left a TRUST to her living 5 children. 1 of the 5 children passed away before her death. When the trust was distributed the grandchildren of the deceased sister received nothing? Only the living children so it was divided 4 ways vs 5. I was curious about why or if this seemed fair. Since its not mine to spend I was not too concerened but it raised a question about our own estate.

In our retirement plan the beneficiaries are our = 3 children but also the "chldren of any direct deceased child"

I guess now I am curious if there are some rational thoughts on if we should have made it to only the living children same as her Mother? I had always just assumed 3 equal shares: My scenario is 3 children 2 are married : One (age 40) had 2 children (age 13-14) and later divorced then remarried. One (age 36) is married with no children. One age (38) is not married . Am I over thinking this?

 

[swaneesr]

You are not over thinking.

I come from a family of three (two sisters). My younger sister passed away in 2014 preceded by my father. My parents estate and trust will be divided equally three ways when my mother passes away and my younger sisters children will inherit her share.

There will some discussion around property but we will make things equal and fair based on preferences of those involved.

To be honest, if the inheritance is ZERO for everyone that is fair too. However, my mom doesn’t spend enough money on herself.

Not dividing equally seems unfair.

Swanee

 

[youbet]

Looking for opinion? My DWs Mother passed away and left a TRUST to her living 5 children. 1 of the 5 children passed away before her death. When the trust was distributed the grandchildren of the deceased sister received nothing?

Did you mean to say children and not grandchildren?

I was curious about why or if this seemed fair.

If DW's mother thought it was fair, then it was fair.

I guess now I am curious if there are some rational thoughts on if we should have made it to only the living children same as her Mother? I had always just assumed 3 equal shares: My scenario is 3 children 2 are married : One (age 40) had 2 children (age 13-14) and later divorced then remarried. One (age 36) is married with no children. One age (38) is not married . Am I over thinking this?

Well, my thoughts are always rational! If there is no reason you're concerned about your two teenage grandchildren (by your 40 year old son) receiving an inheritance if your son predeceases you, then do it that way. Just don't forget their ages and be ready to take on the expense of setting things up appropriately for two teenagers to suddenly have some significant bux. It does add complications in this regard. Are your two grandchildren living with your son or with his ex-wife? If living with the ex-wife, what level of involvement do you want her to have with the boys' inheritance? Etc.?

 

[donheff]

I'm with you Ray. If I was one of the remaining 4 kids I would talk to my siblings about giving 1/5th from each of us to the deceased sister's kids. If they refused I would do it myself. I wonder if the mother got bad advice when she set up the trust or whether she actually wanted to stiff the grand kids.

 

[MissMolly]

If the trust said it went to living children, then that right there leaves out any child who precedes the mother. If there was no provision for "per stirpes" then if a child precedes the mother, there is no provision to pass it down to the next generation. It all depends on how the trust was worded. It's not an issue of fair/unfair, it's all in the wording of the trust. But I tend to agree with Ray and donheff. It may not have been the mother's intention and was just a poorly worded trust.

 

[youbet]

It may not have been the mother's intention and was just a poorly worded trust.

Remember, the two grandchildren are minors. Leaving money directly to them, on the condition their father predeceased you, would only be prudent if you set up some sort of legal control (trust?) to handle things until they are of age. And, since their father is still alive while you're doing this, it would be only a "just in case" situation. Since the son is divorced from the mother and we don't know where or with whom the kids are living or if the mother remarried and there is now a step-father involved, that makes for further complications to get right.

There must be some solution other than simply saying that if the child dies, the money passes directly to the minor grandchildren........

 

[BigNick]

I'm with you Ray. If I was one of the remaining 4 kids I would talk to my siblings about giving 1/5th from each of us to the deceased sister's kids. If they refused I would do it myself. I wonder if the mother got bad advice when she set up the trust or whether she actually wanted to stiff the grand kids.

A friend of ours is bisexual and when her old-fashioned Catholic father died, he left all his money to her two brothers. She didn't get a penny because she was a Sinner, having been at the time in a relationship with another woman. The brothers each gave a third of their respective shares to their sister the day after the will was read.

 

[Raygun99]

I wonder if the mother got bad advice when she set up the trust or whether she actually wanted to stiff the grand kids.

Unfortunatly the Trust was set up when the Mother's Mother passed away. So the mother's intentions were never considered. Her brother was the executor and he distributed the estate in different ways. 1) Received all of the original inheritance at death, 1 received 1/2 with the remaining put into a TRUST and unknown provisions. The 3rd My Mother in Law all went into a Trust to pay for her living and medical expenses almost 20 years and as noted distributed to the 4 remaining children. I can understand why he did the TRUST set up since MIL was not too astute with finances and always a concern of blowing it all too early.
Thanks for the input.
I will make sure mine is with STIRPES: -- It is hard to rationalize distribution based on other means test: I would rather just divide by 3 : and if the grandkids happen to be the recepients, so be it.. I suspect my other 2 kids would want that too!

 

[youbet]

I'm with you Ray. If I was one of the remaining 4 kids I would talk to my siblings about giving 1/5th from each of us to the deceased sister's kids. If they refused I would do it myself. I wonder if the mother got bad advice when she set up the trust or whether she actually wanted to stiff the grand kids.

I like that. Except, what would be the course to take since the kids are 13 and 14 and are likely living with their (the deceased son's ex) mother? Maybe with a stepfather who has adopted them. Maybe you huddle with your siblings, hire an attorney and set up a trust (consulting with your brother's ex, of course) and set up a trust of some kind?

 

[SecondCor521]

I like that. Except, what would be the course to take since the kids are 13 and 14 and are likely living with their (the deceased son's ex) mother? Maybe with a stepfather who has adopted them. Maybe you huddle with your siblings, hire an attorney and set up a trust (consulting with your brother's ex, of course) and set up a trust of some kind?

I think in most states any money left to someone under the age of majority (by whatever method) will automatically fall into a UTMA account. If the will names a custodian for such account, fine; if not, I think the probate court appoints one. Perhaps with input from the executor, I'm not sure.

But then the money would go to the kid at 21 or so. A trust can be set up either in the will or in a living trust that can delay the kid getting the funds until a later age (or ages) as desired.

...

As far as the OP's situation, it's whatever the language in the controlling document (will or trust) says, and that should reflect the intent of the person executing the document. In my family everything is split equally at each generation and is per stirpes, but that's just what we want and what works for us. I can easily imagine situations where other solutions would make better sense.

Every family is unique. Hopefully everyone executing a will or trust understands how it will be applied and the document accurately reflects their wishes and intent. But I'm sure it's not perfect 100% of the time.

 

[cathy63]

I like that. Except, what would be the course to take since the kids are 13 and 14 and are likely living with their (the deceased son's ex) mother? Maybe with a stepfather who has adopted them. Maybe you huddle with your siblings, hire an attorney and set up a trust (consulting with your brother's ex, of course) and set up a trust of some kind?

Yes, you can have a clause that sets up trusts for the minor children with their mother or one of the other siblings as trustee. This is what my in-laws wrote into the instructions for disbursing their trust. It ended up being moot because MIL and all her children are still alive and all the grandchildren are now adults.

 

[phil1ben]

The very first thing any attorney is taught in the basic wills and estate course in law school is the concept of per stirpes. Per stirpes is a legal term stipulating that should a beneficiary predecease the testator—the person who has made the will or the trust—the beneficiary's share of the inheritance goes to that beneficiary's heirs. That is if a decedent had four children and one predeceased him/her, a will or a trust that provides per stirpes means that the estate would be divided 4 ways (1/4 to each living child and 1/4 to the children of the deceased child).

I am of the opinion that every single lawyer (assuming the will or trust was drafted by a lawyer) would have asked your MIL if she wanted her assets disbursed per stirpes. I believe she made a conscious decision if the will was drafted by a lawyer to disburse her assets exactly the way the will provided (i.e. to each living child and not per stirpes). If the children wish to gift assets they received to their nieces and nephews that is their decision which they are free to make.

 

[Chuckanut]

When my grandmother died she left all her assets to her two sons. Her two daughters got zip. My mother got nothing. My deceased aunt’s children got nothing.

I learned a lesson from this. My kids all get the same percent. If one dies before me, their share goes to their kids.

By the way, the lawyer I consulted walked me through all of this. At her suggestion I even have an heir listed in the unlikely event that all my children and grandchildren predecessor me.

 

[rodi]

Interesting and timely topic. BIL passed 3 weeks ago. No wife/kids. So intent is to leave it to is 5 surviving siblings. BUT - one of the siblings is disabled with mental health issues and cannot handle a large sum of money. (Plus it might impact his disability... not sure). BIL set up his will to leave his estate to his 4 siblings that are not disabled - but told them to take care of the disabled brother with the extra money.

 

[OldShooter]

Looking for opinion? My DWs Mother passed away and left a TRUST to her living 5 children. 1 of the 5 children passed away before her death. When the trust was distributed the grandchildren of the deceased sister received nothing? Only the living children so it was divided 4 ways vs 5. I was curious about why or if this seemed fair. Since its not mine to spend I was not too concerened but it raised a qu ...

Well, the "why" is that the trust specified this particular distribution scheme. It would be very rare for a trustee to have discretion in a matter like this. Re "fair" I guess that is a a judgment call vs the grantor of the trust.

Interesting and timely topic. BIL passed 3 weeks ago. No wife/kids. So intent is to leave it to is 5 surviving siblings. BUT - one of the siblings is disabled with mental health issues and cannot handle a large sum of money. (Plus it might impact his disability... not sure). BIL set up his will to leave his estate to his 4 siblings that are not disabled - but told them to take care of the disabled brother with the extra money.

The four siblings might want to talk to a lawyer about setting up a special needs trust with all four contributing financially. Trustee could be a professional or all four as co-trustees with the lawyer as the fifth co-trustee. A special needs trust is specifically designed so that any public benefits due to the beneficiary are not compromised. Getting the contributions into a trust while the death and the intent are still fresh memories might be easier than getting the money later. A trust like this is what BIL probably should have been advised to do in the first place.

 

[swaneesr]

When we setup our trust, our children were minors and we set the ages where each of my sons would receive a percentage of the estate. We picked ages for distribution of 21, 25 and 28 thinking that would give our children several chances to use the money for good purposes.

When my younger sister passed away her two children were 25 and 17 years of age. Cars casinos and other spending was the result of the 300K in insurance and inherited 401k funds for each child. The good news is both kids are on better paths now with jobs and futures. The inheritance was not a blessing. It was sort of a bad diversion for a few years that they had to over come.

Swanee

 

[OldShooter]

When we setup our trust, our children were minors and we set the ages where each of my sons would receive a percentage of the estate. We picked ages for distribution of 21, 25 and 28 thinking that would give our children several chances to use the money for good purposes. ...

This kind of thing is somewhat popular, but has a problem: the trustee has no flexibility. What happens if one of the sons is temporarily or permanently disabled and needs expensive home care when he is 23? Other bad and expensive things can happen, too, some of which situations where the grantors would like to help but they have tied the trustee's hands. IANAL but one rubric that is used in trust legalese is the "HEMS" standard, allowing discretionary money for health, education, maintenance, and support. There's a bunch of case law that defines that.

The good news for a trustee with no flexibility, they can be a family member without having the risk of discretionary decisions creating a family fight.

 

[Sunset]

Perhaps it's the time of the Will creation, or even a cultural/family influence.

I'm looking at a Will right now that is per stirpes for each beneficiary, BUT only if each beneficiary lives 30 days past the decedent's date of death.

I don't get if one intends a per stirpes , why put in a clause that could negate it so arbitrarily.

 

[SecondCor521]

Perhaps it's the time of the Will creation, or even a cultural/family influence.

I'm looking at a Will right now that is per stirpes for each beneficiary, BUT only if each beneficiary lives 30 days past the decedent's date of death.

I don't get if one intends a per stirpes , why put in a clause that could negate it so arbitrarily.

Probably a severe disincentive to go on foreign trips with Dear Old Dad.

"Hey son, want to go on a trip to the Canary Islands?"

"No thanks, Pops. If the plane goes down it'll disinherit my kids."

 

[CindyBlue]

My parents' trust was set up so that my brother's child only got a share of what was in the trust if I had passed on before my dad (my last living parent.) It was done because they had given a LOT of money to support him while they were - and he was - living, because he was financially irresponsible and they thought he needs help. Because of that help, they figured he'd already got his inheritance before they actually passed. So maybe that was a possible reason why your parents did what they did?

 

[marko]

Our personal trust is set up so that should one of the nieces/nephews dies before we both do, the amount is then divided by the remaining DN/DNs, NOTHING to the children of the deceased DN/DNs.

The trust fund that I'm beneficiary of is the same: when some long lost cousin dies, I get a raise! (a bad news/good news situation I suppose)

 

[brett]

Difficult to know what was this was her real intent.

One thing for certain, she had every right to select who among her children, and her grandchildren were to share in her estate. And she apparently consulted a lawyer to do exactly that.

 

[CRLLS]

Perhaps it's the time of the Will creation, or even a cultural/family influence.

I'm looking at a Will right now that is per stirpes for each beneficiary, BUT only if each beneficiary lives 30 days past the decedent's date of death.

I don't get if one intends a per stirpes , why put in a clause that could negate it so arbitrarily.

That sure sounds contradictory to me. IANAL. I would think that wording would be subject to interpretation which means a court could have to determine the intent and rule on the proper beneficiaries.

 

[youbet]

Interesting and timely topic. BIL passed 3 weeks ago. No wife/kids. So intent is to leave it to is 5 surviving siblings. BUT - one of the siblings is disabled with mental health issues and cannot handle a large sum of money. (Plus it might impact his disability... not sure). BIL set up his will to leave his estate to his 4 siblings that are not disabled - but told them to take care of the disabled brother with the extra money.

Might be a mistake your BIL made. Now he's trusting that the 4 non-disabled siblings will work in harmony and in the best interest of their disabled sibling. Lotsa risk there. It would have been relatively simple to set things up for the disabled sibling while BIL was still alive in a way where the income from a special needs trust would not have impacted any of disabled sibling's public-sourced benefits, would have been managed for the disabled siblings benefit and the remaining 4 siblings would have been a bit more "arms length" in the situation. That is, no decisons requiring consensus about how much, when, why, etc., to pass over to their disabled kin.

OTOH, the 4 non-disable siblings way find a way to work in perfect harmony, share the management responsibilities equitably and effiiciently, reach consensus in all decisions, etc. But there just might be a bit of risk there.......

 

[qwerty3656]

My dad died before his parents. It wasn't alot of money, but when my grandparents died, they had a child class and a grandchild class and we got our share of the grandchild class.
If the "child" level was still alive, I don't think their kids participated in the grandkid class - So they first divided by # of children (both living and dead) and those that were still alive got their share - those that were not were divided among the grandchildren of the dead children.

Edit: just a side note. My mother got nothing which I thought was weird (I gave her my share). She was married to my father for over 30 years.