31 Mar Avoiding a fight over my money when I’m dead
Q. My son is 30 and not responsible with money. My other son is 24 and also not very responsible. I help them sometimes with debts, and while I can manage my own expenses, this eats into my nest egg. I also have a 26-year-old daughter who is very on top of her finances. Eventually they will inherit this money, but it seems unfair that my daughter hasn’t gotten help from me — she hasn’t needed it — while the boys have. What can I do to make this equal and so there are no fights when I die?
A. Great question, and not an uncommon situation.
If your goal is to make sure all three of your children receive equal amounts of your nest egg, it’s recordkeeping time.
“You’ll need to keep track of who has received what, and then this sounds like a job for an estate planning attorney,” said Alison Williams, a certified financial planner with Stonegate Wealth Management in Oakland. “They should be able to work wording into your last will and testament that will acknowledge the ‘advance’ in inheritance and subsequent uneven distribution of assets.”
She said you’ll need to revisit this and update the documents if/when there are substantial changes in the amounts received by your children.
Mary Scrupski, a Robbinsville-based estate planning attorney, suggests this course of action:
First, try to figure out exactly how much you have given to each of your sons and direct your executor to make an equal distribution to your remaining children before dividing up the balance of your estate, she said.
“In other words, if you have given your oldest son $1,000, your executor would first distribute to your other son and to your daughter the sum of $1,000 before making any other distributions,” Scrupski said. “Then if you have given your youngest son a $1,000, the executor would first distribute $1,000 to your daughter and $1,000 to your oldest son.”
Scrupski said another important consideration is the choice of executor. Although the logical choice might be your daughter because she is good with finances, this might lead to hard feelings among your children if there are any questions about the equalizing distributions, Scrupski said.
“You may consider a non-family member who has no financial interest in the estate to administer the estate,” she said. “This might help avoid a fight since the executor is only carrying out your wishes, and your daughter will not necessarily be put in the middle of things.”
Alternatively, you could name your daughter as the direct beneficiary of one of your bank accounts, Scrupski said. She would then get the account in addition to whatever she might receive under your will.
“Your will controls `probate’ property, which is anything that has your name on it and does not have a beneficiary,” she said. “Non-probate property includes bank accounts that name a named beneficiary, or joint accounts. Non-probate property passes directly to the beneficiary.
If you decide to do this, Scrupski said, you might want to consider putting a statement in your will that you intend for “non-probate” transfers to be in addition to whatever a beneficiary might receive under your will, and these amounts should not be applied towards his or her share of the estate. This might help avoid any disputes.
“Of course, you could also make lifetime gifts to your daughter equal to what you have given your sons,” Scrupski said. “This would probably be the best way to avoid disputes when you are gone.”
Here are a few more ideas for handling the money your sons will inherit.
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This story was first posted in March 2015.NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.