Grandpa died, left everything to a trust. I have questions...

[rmcelwee]

My wife's grandfather died. Her mother (sole heir) is horrible with money so everything was left in a trust. My wife is great with money and is the executor of the trust. We had great plans to use the money to help her mother out but it seems like this is a horrible way to accomplish it and sounds like it is fantastic way for the lawyer to drain the trust of money. Mother lives in a house owned by grandpa ($100k) and drives a car owned by grandpa ($2k). There is also another house and car. In addition, mother is on medicaid and can only get so much money (about 25K per year including 10K in SocSecurity) before getting kicked off. There is probably around $400K total in property. Mother is a very unhealthy 70 years old.

It sounds to me that every time mother wants a ham sandwich we will pay for it, submit a bill to the trust and the lawyer will give us $2 and keep $75 as a fee (I don't know for sure but I am sure it is somewhat based in fact).

I suggested my wife relinquish the title of executor (or whatever her title is) and just let mother and lawyer handle all of it. Just too much hassle. I really hate to see fees and inflation destroy the money he left. Any extra money given to mother will be completely wasted.

Wife will have another meeting with the lawyer this week and I would like to give her a list of intelligent/important questions to ask. Any suggestions?

 

[perez99]

I don't know much about trusts, so can't help there.
However if the mother is not good with money then leaving her to deal with this don't seems a good path unless there is no real interest in the mother well being.

 

[ivinsfan]

I remember you and your MIL!!!

Why don't you let your wife take the meeting with the lawyer. listen to the lawyers explanation and decide for herself how she wants to handle her Mother's needs.

From what I remember of your story it's going to take either money (lawyer fee) or emotional capital to deal with MIL. I'd probably pick the money in your shoes.

 

[rmcelwee]

if the mother is not good with money then leaving her to deal with this don't seems a good path unless there is no real interest in the mother well being.

I think if my M-I-L says "Hey, I want $10,000 to buy new Tinkerbell lampshades" (a very real possibility with her) the trust will deny the request.

We would like to see her basic needs met with the money but I think it will be a real PITA the way Grandpa set it up combined with the restrictions on assets and income due to Medicaid.

 

[ivinsfan]

I think if my M-I-L says "Hey, I want $10,000 to buy new Tinkerbell lampshades" (a very real possibility with her) the trust will deny the request.

We would like to see her basic needs met with the money but I think it will be a real PITA the way Grandpa set it up combined with the restrictions on assets and income due to Medicaid.

I'm not following your reasoning here it seems like a trust will keep her from living on the streets. The PITA part is the part that will keep her solvent.

 

[rmcelwee]

I remember you and your MIL!!!

Yep, it is me! I offered to redo MIL's entire house (new paint, carpet, flooring, kitchen, etc) if she would only clean some of the junk off the floor. A year later and it is still not done. I haven't completely given up at this point but I am close to it. I really wish Grandpa would have listened to us and not the lawyer.

 

[cathy63]

Questions I would be asking, were I in your (or your wife's) shoes.

Are your wife and the attorney both equal trustees of the trust? Are both of them required to sign off on all expenses and disbursements? Or is the attorney the sole trustee while your wife is executor of the estate for assets outside the trust.

Does your wife have a copy of the trust paperwork? If not, get one and read it.

Would it be possible to disburse an annual stipend from the trust into an account that is managed by your wife for the benefit of her mother? Then the attorney doesn't need to be involved on a daily basis, only when there are unusual expenses that exceed the normal stipend.

 

[ivinsfan]

Yep, it is me! I offered to redo MIL's entire house (new paint, carpet, flooring, kitchen, etc) if she would only clean some of the junk off the floor. A year later and it is still not done. I haven't completely given up at this point but I am close to it. I really wish Grandpa would have listened to us and not the lawyer.

Maybe Grandpa knew what she needs and choose not to put his GD in the middle.

 

[OldShooter]

The first thing your wife needs to do (if she has not done this) is to get a copy of the trust document and read it carefully. Questions include whether sheis an equal co-trustee and what power she might have to fire the lawyer that you don't trust and replace him/her with a different trustee. Also determine what/how the trust can provide money to her mother. In most trusts the trustee(s) do not control to the ham sandwich level. Possibly she (maybe even without the lawyer) can arrange for mother to get a fixed amount every month. The trust may even be a "special needs" trust which has the goal of not being an asset that disqualifies mother from government benefits. No way around it -- this stuff is complex.

If she does not get satisfaction from the lawyer; good empathy, complete and understandable explanations, etc. then she may have to consult another trusts & estates lawyer. In the extreme she may be able to go to court to have her current co-trustee replaced. A court can also change the terms of the trust but that is a heavy lift.

But the first step is understanding the trust document. She should study it carefully before meeting with the lawyer even if that means the meeting has to be postponed. You can help by doing the same studying. Then you can both have eyes that are glazed over.

 

[ivinsfan]

Questions I would be asking, were I in your (or your wife's) shoes.

Are your wife and the attorney both equal trustees of the trust? Are both of them required to sign off on all expenses and disbursements? Or is the attorney the sole trustee while your wife is executor of the estate for assets outside the trust.

Does your wife have a copy of the trust paperwork? If not, get one and read it.

Would it be possible to disburse an annual stipend from the trust into an account that is managed by your wife for the benefit of her mother? Then the attorney doesn't need to be involved on a daily basis, only when there are unusual expenses that exceed the normal stipend.

I wonder if the OP can link the original thread about the MIL here? The setup you mentioned might be very hard on the daughter emotionally, I wouldn't want to do it in those circumstances.

 

[rmcelwee]

I'm not following your reasoning here it seems like a trust will keep her from living on the streets. The PITA part is the part that will keep her solvent.

Giving the money straight to us to hold (our plan involved buying SPY and giving MIL 1% of total worth per quarter) would have been a better way to do it IMHO. I see the lawyer/trust as a middleman that makes everything inefficient and expensive. I have no idea how to keep her in the current home which she does not own and on Medicaid. I do not understand how the trust works.

 

[rmcelwee]

Are your wife and the attorney both equal trustees of the trust?

Does your wife have a copy of the trust paperwork? If not, get one and read it.

Would it be possible to disburse an annual stipend from the trust into an account that is managed by your wife for the benefit of her mother?

She is in FL and I am in SC. I won't see her for another week but I will get the paperwork. Thank you for the very good questions! I will definitely get her to ask them...

 

[athena53]

Is Medicaid a necessity now? I'm assuming she's eligible for Medicare at age 70. Does she now have enough liquid assets to pay Medicare premiums? That may free you of the need to set up disbursements in a way that still qualifies her for Medicaid.

 

[cathy63]

I wonder if the OP can link the original thread about the MIL here? The setup you mentioned might be very hard on the daughter emotionally, I wouldn't want to do it in those circumstances.

Yes, I can imagine lots of reasons why she might want/need to separate herself from the money, or even the rest of the situation. I do think it's worth finding out what the trust actually says though, since there's apparently some confusion about her appointed role vs the lawyer's.

 

[rmcelwee]

Maybe Grandpa knew what she needs and choose not to put his GD in the middle.

I was thinking just the opposite. She had already taken on the responsibility of making sure MIL didn't starve after Grandpa. Only now she has to involve lawyers and stuff any time MIL's A/C is busted or car insurance needs paid. I hope it will not be as bad and as expensive as I am thinking it will!

 

[rmcelwee]

I wonder if the OP can link the original thread about the MIL here? The setup you mentioned might be very hard on the daughter emotionally, I wouldn't want to do it in those circumstances.

Yes, the entire ordeal has been very hard for my wife her entire life, especially the past two years.

Original thread:
My M-I-L is a BUM! Looking for tax advice (gift tax and giving house away)
https://www.early-retirement.org/fo...ice-gift-tax-and-giving-house-away-98570.html

 

[rmcelwee]

But the first step is understanding the trust document. She should study it carefully before meeting with the lawyer even if that means the meeting has to be postponed.

I like this. Thanks!

 

[pb4uski]

My wife's grandfather died. Her mother (sole heir) is horrible with money so everything was left in a trust. My wife is great with money and is the executor of the trust. We had great plans to use the money to help her mother out but it seems like this is a horrible way to accomplish it and sounds like it is fantastic way for the lawyer to drain the trust of money. Mother lives in a house owned by grandpa ($100k) and drives a car owned by grandpa ($2k). There is also another house and car. In addition, mother is on medicaid and can only get so much money (about 25K per year including 10K in SocSecurity) before getting kicked off. There is probably around $400K total in property. Mother is a very unhealthy 70 years old.

It sounds to me that every time mother wants a ham sandwich we will pay for it, submit a bill to the trust and the lawyer will give us $2 and keep $75 as a fee (I don't know for sure but I am sure it is somewhat based in fact).

I suggested my wife relinquish the title of executor (or whatever her title is) and just let mother and lawyer handle all of it. Just too much hassle. I really hate to see fees and inflation destroy the money he left. Any extra money given to mother will be completely wasted.

Wife will have another meeting with the lawyer this week and I would like to give her a list of intelligent/important questions to ask. Any suggestions?

I think that you are hugely overreacting. I also wonder why it is necessary for a lawyer to be involved at all.

There is no such thing as executor of a trust. Your wife is likely the trustee or a co-trustee along with the law firm. You need to have her read the trust document to find out.

My Dad has a trust and Mom is the beneficiary and Mom, sis and I are co-trustees with two of the three of us authorized to act on behalf of the trust. At this point, I have all assets other than two real estate properties in an account at Vanguard and dividends are paid directly into Mom's checking account. No lawyer needed.

While Mom is very prudent with money, if she wanted to use trust funds to do something crazy then sis or I would have to agree. As a practical matter, we have never had an instance where we disagreed on any trust action.

Are you sure that the house isn't owned by the trust? In our case the trust owns the real property.

WADR, for your wife to decline to act as a co-trustee would be disrespectful to her grandfather IMO... I assume that her grandfather knew that her Mom was horrible with money and that may be why he set up the trust to begin with... to have some governance on her Mom's spending so she doesn't blow through what is left for her care.

From what you have described, I'm guessing that grandpa probably set up the trust to not mess up his daughter's Medicaid eligibility... but the lawyer can elaborate on the impact of the trust on the Mom's medicaid eligibility.

Good luck.

 

[rmcelwee]

Is Medicaid a necessity now? I'm assuming she's eligible for Medicare at age 70.

I do not know how this slipped my mind. I guess I don't think about my MIL's age all the time. i have no idea why Medicaid is still a hindrance. I know MIL cried last year when my wife told her we were going to put the house in her name. She said she would lose her Medicaid but I never really thought about what that meant.

 

[rmcelwee]

I think that you are hugely overreacting. I also wonder why it is necessary for a lawyer to be involved at all.

Yes, I probably am. Wife called me from 500 miles away with a story of how things are yet again even more complicated than they were two weeks ago when Grandpa was alive. Thanks for the nice suggestions!

BTW, the complication from two weeks ago was Grandpa stuck in a HORRIBLE $10K a month nursing home where we could not get him out and could not see him (covid scare reasons in FL). They left him lying in a bed for six months developing bed sores, etc. Wouldn't even let us talk to him on the phone. BUT, that is another story.

 

[socca]

I agree with the other posts that suggest that both you and your wife need to thoroughly read and understand the trust document to find out who has what power regarding trust administration. If your wife is a co-trustee of the trust with the lawyer, then they can come to an agreement regarding who does what regarding trust administration. In practice, one trustee often takes over most of the work while the others just kibbitz. Of course, the lead trustee needs to be aware of everything that needs to be done for this arrangement to work. Good luck!

 

[Dash man]

A corporate trustee is a better way to go than a lawyer. Schwab has pretty low fees and I’m sure there are others too. Read the trust and see if you can fire the lawyer.

 

[meierlde]

My wife's grandfather died. Her mother (sole heir) is horrible with money so everything was left in a trust. My wife is great with money and is the executor of the trust. We had great plans to use the money to help her mother out but it seems like this is a horrible way to accomplish it and sounds like it is fantastic way for the lawyer to drain the trust of money. Mother lives in a house owned by grandpa ($100k) and drives a car owned by grandpa ($2k). There is also another house and car. In addition, mother is on medicaid and can only get so much money (about 25K per year including 10K in SocSecurity) before getting kicked off. There is probably around $400K total in property. Mother is a very unhealthy 70 years old.

It sounds to me that every time mother wants a ham sandwich we will pay for it, submit a bill to the trust and the lawyer will give us $2 and keep $75 as a fee (I don't know for sure but I am sure it is somewhat based in fact).

I suggested my wife relinquish the title of executor (or whatever her title is) and just let mother and lawyer handle all of it. Just too much hassle. I really hate to see fees and inflation destroy the money he left. Any extra money given to mother will be completely wasted.

Wife will have another meeting with the lawyer this week and I would like to give her a list of intelligent/important questions to ask. Any suggestions?

Is your wife the trustee or is the lawyer the trustee? If if she is it she can just write the checks, if not then submit ai itemized bill with all expenses for a period every so often.

 

[gerntz]

I don't understand "executor of a trust". As far as I know, you're either executor of will or trustee of trust.

 

[Gumby]

A low income, low asset person can be "dual eligible ". That is, eligible for both Medicare and Medicaid. As you know, Medicare alone doesn't cover all expenses

I do not know how this slipped my mind. I guess I don't think about my MIL's age all the time. i have no idea why Medicaid is still a hindrance. I know MIL cried last year when my wife told her we were going to put the house in her name. She said she would lose her Medicaid but I never really thought about what that meant.