Dear Newsweek, Our mother passed away last year leaving an inheritance of about $300,000 to be given to each of 5 siblings. None of it has been distributed yet by the trustees, my sister and brother, due to some legal issues. These issues will be taken care of within a few months.
My brother, one of the administrators, recently passed away leaving his 70+ year old widow broke because of their spending habits. We love our sister-in-law, but she can’t handle money and will quickly blow through it if given to her all at once. Morally we feel she has a right to it, but is there a way it can be given to her children to give it to her in small installments or is there a way we surviving siblings can set up a legal entity to to hold it and give it to her in increments? If she doesn’t get it the same way as the rest of us, she gets furious. She has SS and his small pension to live on. Their home has been refinanced numerous times to pay off credit cards so I fear there is little equity in the home.
What can we do? In advance, thank you for your help.
Neil, unknown
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Read the trust documents and see what they say
Andrew M. Lieb, Managing Partner of Lieb at Law.
What a tough situation and I’m sure you’re not the only one who feels stressed about something like this; Letting your parents’ money go to waste is emotionally challenging.
But when it comes to a trust, the terms of the trust dictate what happens to the money from the trust. So other beneficiaries can’t do anything to change who gets money from the trust, no matter how benevolently motivated you are. That said, perhaps your sister, who is the trustee or representative of your deceased brother, has the power to limit distributions in the trust documents.
Often a trustee is given such power in the trust. You should therefore read the trust documents and see what they say. When it comes to trusts, giving legal advice without reviewing the documents is like giving medical advice about a break without first reviewing the x-ray. Good luck.
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It may be possible to protect the trust funds and support the sister-in-law
Family Law Attorney, Sabrina Shaheen Cronin, Founder and Managing Partner of The Cronin Law Firm.
Distributing the assets held in a trust after a loved one passes away can sometimes come with a unique set of challenges, such as the predicament in this case. Generally, a well-written trust document will provide instructions to the trustees regarding their ability to control and distribute the assets of the trust. For example, some trust documents will allow trustees to distribute assets within their reasonable discretion under the circumstances. This type of language can give the trustee the power to distribute the assets to the beneficiaries as they see fit; be it in one lump sum, installment payments or in an entirely separate trust designed to support the beneficiaries. In the event that the trust does not contain language that gives broad authority to the trustee, but instead has strict instructions as to who the funds should be distributed to, how and when, the asset distribution process can become more complex.
In this particular scenario, if the trust allows the trustees to distribute the funds as they see fit, it may be best to create a separate trust with the funds to be used to support their sister-in-law; however, doing so may expose the trust to further investigation and potential litigation if she feels the need to challenge the trustee’s decisions in court. In the event that the trust document does not give the trustees such broad authority, and the family truly believes that their daughter-in-law is incompetent or unable to support herself, it may be worth consulting an experienced probate attorney about obtaining a sister-in-law guardianship . Generally, family members are able to petition the probate court for guardianship of those who may be unable to support or care for themselves, especially in cases where there are demonstrable mental disabilities. If this is the case, an experienced probate attorney well versed in guardianship matters will be able to help the family move forward and potentially gain guardianship and control of the sister-in-law’s finances and ultimately the inheritance under the trust.
Another option could be for one of the sister-in-law’s children to be given power of attorney over her finances. As long as a durable or financial power of attorney is properly drafted and executed in accordance with state law, it can allow one of the sister-in-law’s children to monitor her finances and control spending. This must of course be agreed voluntarily by the sister-in-law and will require the assistance of an experienced real estate attorney.
Overall, depending on the specific provisions of the trust, along with the laws of the state where the trust is administered, it may be possible to protect the trust funds and support the sister-in-law to ensure that she is able to continue living comfortably and without worry . Either way, it is a loving and kind gesture for the deceased brother’s siblings to ensure that his surviving spouse is cared for by means they may not necessarily provide her. Neil mentions that the inheritance should have been distributed a while ago. He does not mention what legal issues prevented the distribution, or whether the trust gives any direction as to whether the spouse of a deceased sibling is entitled to inherit anything. Many facts that remain unknown can greatly influence the outcome. Neil says that morally they all feel it is the right thing to do; and when everyone is aligned, things generally go much more smoothly.”