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My SIL is totally out of touch with reality when it comes to money. She can't hold a job, regularly has the phone company cut her off for non-payment of her bills, most years doesn't file her income taxes, etc. Her parents have been "helping her" with her rent and groceries for some years. (She is single.)

Her parents are getting elderly, and they have named the Countess as the executrix of their estate. Because of this, we know that they plan to simply leave lump sums to each of their children. It's not a huge fortune (Mostly their paid-for house), but we can see that the SIL will blow through any inheritance she gets in a short time, and will have no idea where it went. She will then likely expect her big sister to help her out financially the way her parents have been doing.

The Countess has suggested they set up a way to dole money out rather than a lump sum.

Any suggestions as to how to do this would be appreciated.

Count No'Count
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No. of Recommendations: 1
Don't, just hope she don't do to you what my SIL did to my wife. Had will changed to make her major receiver, was 1/3, when wifes Pop came down with early Althiemerz(?), and to say the least, she was executor. Found out wife got nothing, because of the big screen tv's Pops bought, his plus size woman's clothing and nighties (had about $35k on credit cards). Well, when push came to shove SIL said, there wasn't any money after paying bills, oh, and he left her the house with the reverse mortgage loan, don't know what happened there, as it has been about 3 years since wife's Dad passed and over 2 years since she has heard from her sister. And yes, they got kicked out of their house in a foreclosure, showed up here, stayed longer than expected, couple a hours would have been fine, lost a $800 banjo, and a 1973 12 string Ibanez guitar, told wife they had to go. I ain't talked to her in ablout 5 years personally, cepting hi at Pop's funeral.

Cover your ass and hide your valuables.
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No. of Recommendations: 5
As far as I know executrixes do not make decisions about doling out estates - they follow the directions in a Last Will. Based on your description, it might well be better to have your SIL burn through the funds - at that point she will get to face the world on her own.

But with regards to the idea of doling out the funds - #1 Talk with some one who knows inheritance law of the jurisdiction where the estate will be. #2 If as executrix the Countess has the authority to decide how to distribute the estate, you might purchase a lifetime annuity. Generally I am totally opposed to annuities, but maybe it makes sense.

Gordon
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But with regards to the idea of doling out the funds - #1 Talk with some one who knows inheritance law of the jurisdiction where the estate will be. #2 If as executrix the Countess has the authority to decide how to distribute the estate, you might purchase a lifetime annuity. Generally I am totally opposed to annuities, but maybe it makes sense.


I'd bet there's nothing executrix can do, but there may be things parent(s) can do with the will

trouble with annuity in this case--- easy for SIL to sell for lump sum, likely to be less than cost of annuity



AND there may be ways for Countess to get burned if the will is sloppy
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Yeah, I don't like annuities at all either.

But Barron's May 27, 2013 Cover Story is about how some annuities are offering low cost options:

....firms are giving the oft-maligned annuity a makeover: an ultralow-cost [sic], variable annuity that offers a broad array of alternative investments, including hedge funds, currency funds, managed funds and other strategies....

I still wouldn't buy or recommend one but agree it could be appropriate in this case to save her from herself.
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You can't save SIL from herself. Nor, really, do you really have the right to. It's her life, and she has the right to run it the way she wants---even if you think she should do differently.


My 1st though was an annuity, but, yeah, the very first JJ Wentworth commercial she saw on TV would negate that.

Next best thing would be to set up her inheritance as a trust controlled by a local bank or lawyer, with pre-defined periodic distributions.

The absolute WORST thing is for you or wife(?) to be in control of her money. That would be nothing but grief for you.

Obviously, the parents who the inheritance is coming from would have to be the ones who set up the trust.

This cannot be an unknown problem with estate law --- surely wastrel inheritors has to be a common problem going back centuries. So surely an appropriate lawyer would be able to make suggestions.
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No. of Recommendations: 1
The only solution I see is for the parents to put the SIL's portion of the estate in a Trust with a monthly stipend to her. Of course, the bank managing the trust will want to skim off 2% to 3% a year in fees.

intercst
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Thanks for the several good suggestions. The only ones who can do anything are the parents. The Countess has mentioned her concerns to them already. She may go back again. We don't like the idea of supporting her.

We (Countess) has already realized that if I croak before she does (Pre-croak?)*, her sister may live with her. Not necessarily a bad idea, if they can get along.

Count No'Count
*Likely, as I am several years her senior.
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Of course, the bank managing the trust will want to skim off 2% to 3% a year in fees.

I would like to know who your bank is -- we are talking about 1/3 of a house and all the data available suggests to me this is not a million dollar house. If you think a bank will handle $250,000 for a mere $7,500 a year, you don't deal with the kind of banks I know.

Gordon
Atlanta
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Count wrote We don't like the idea of supporting her.

So refuse to be involved. Last time I checked handling the affairs of an estate is at best a PITA. Any attorney worth a postage stamp for his bill will have an alternate executor. And even if not, the state will do the duty if you refuse.

I appreciate your situation, but just remember you are choosing to unhappy and imposed upon.

Gordon
Atlanta
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No. of Recommendations: 3
TwoCybers asks,

<<Of course, the bank managing the trust will want to skim off 2% to 3% a year in fees.>>

I would like to know who your bank is -- we are talking about 1/3 of a house and all the data available suggests to me this is not a million dollar house. If you think a bank will handle $250,000 for a mere $7,500 a year, you don't deal with the kind of banks I know.

</snip>


It depends on how difficult it is to manage the trust. If all the trustee is doing is sending a monthly check from an account with CD's and mutual funds, 2% to 3% is plenty (the nationwide average for a $250,000 trust is a 1.31% fee.) If the Trustee is managing lawyers and litigation, they start charging hundreds of dollars an hour plus the legal expenses. It depends on what's going on.

Here's a link to average Bank Trust Fees nationwide.

http://investor.financialcounsel.com/Articles/EstatePlanning...

intercst
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interacts thank for for data.

Gordon
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Count here is a link that speaks to a subject you may find interesting.

http://goo.gl/yPyh6

Gordon (aka TwoCybers on TMF)
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No. of Recommendations: 2
There are a couple of points to consider.

If most of the parent's net worth is in the equity of their home, I'd recommend they hold the house in a revocable trust that will instruct the beneficiaries to sell the house and distribute the net of sale equally to siblings. Real estate held by the decedents estate will virtually always lead to discord within the family.

The other recommendation is to consider the revocable trust to create a "spend-thrift" trust at death (testamentary) that will limit how much the trust must distribute each year, and will protect the inheritance from credits as long as it remains in trust

A trip to discuss this with a RE attorney might be a good f

BruceM
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RUN to Amazon and buy this book for all the reasons this is a really really bad idea

http://www.amazon.com/Beyond-Grave-revised-Leaving-Children/...

This exact situation is discussed. The kid who is getting money "doled" out to them will want more -- then will call you, harass you, claim you stole some of it...

Get a professional executor to handle sister's part, someone who can't be cried or begged or strong-armed into changing the donation amounts.

Read.the.book. Best book on trusts ever written - by a lawyer and his lawyer son, stories of...trusts, the good and the bad that happens after the folks die and the kids proceed to divvy things up.
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