Unequal inheritance and sibling relationships

[Anonymous]

Not sure whether to post here or in Money forum, but I think here makes more sense.

DH and I are mid-40s and each stand to inherit 7 figures absent something extremely unusual. We still need to work and think about our finances, but overall we are extremely well-off. Unless something extreme happens, we aren't planning our retirements or college funding around the inheritances.

Each of us has an older sister (I also have a younger brother) who is not as well-off as we are. For various reasons each of our parents are considering transferring some assets now, with more going to our sisters. Since for now it's my parents' and ILs', and I don't need it anyway, I am okay with this. DH actually raised giving extra funds to his sister himself. Is there something I'm missing, however, that could create an issue in the future?

I am lucky to not have gone through managing an estate, but I understand that it can raise uncomfortable feelings and questions. Is there something we should suggest now (maybe in how things are structured) to avoid anything difficult in the future? I don't know what that would be...maybe if DH or I end up with a significant illness or disability?

[Anonymous]

Well that's generous of you, OP and husband.

As the child witness of a family feud centering on a very unequal inheritance that spawned a 25 year legal battle, and an adult witness to my in-laws' more polite negotiations about who gets what, I am strongly convinced that siblings need to receive equal shares, especially if these shares are on the large side and no one is in desperate straights.

If everyone agrees on the distribution, then potential issues arise when the wording of the will is vague, people forget certain provisions, or the executor is incompetent or dishonest.

Make sure everything is written out and agreed upon and signed by everyone, and the executor is a responsible person. This is how my in-laws have, thus far, avoided coming to blows over their inheritance: my husband insisted on writing down all the proposed transactions, current and future, and getting everyone's formal approval. Everything is dated, because they've had to change distribution over the years (my youngest BIL died unexpectedly of a brain tumor) and each new document supersedes previous ones. Otherwise, left to their natural state, memories are HIGHLY unreliable: descendants always tend to forget transactions that benefited them, but always pointedly remember the ones that benefited the other descendants

[Anonymous]

I posted here a few years ago and when my husband found out one of his two siblings had received a 1 million dollar gift in order to buy a bigger house in a fancier neighborhood.

The consensus was my husband was a monster to even make a mental note of the disparity.

that’s crazy, imo. Yes, he noticed and thinks it’s f’d up by his parents and his sibling (which is his right, just as it’s indisputably his parents right to do a weird unequal gift/inheritance.)

[Anonymous]

It should all be equal!

[Anonymous]

Thanks 21:20 for the quick reply.

I realize my title is unclear, because the funds would be dispersed now...but they would otherwise be in our inheritance. In MIL's case, there is some financial/tax reason that DH is trying to understand. For my parents it's because my dad had an investment (that was money he was saving for all of us) unexpectedly pay out a large amount, and my sister is facing an extreme hardship (she is SAHM and BIL has terminal illness), so he wants her to give her some extra security now.

Given that these funds are being dispersed now (i.e. won't be accounted for in the will), is there somewhere to document what is being done and why? Both sides (MIL and my parents) are clear that this is money that would otherwise have been willed to their kids equally.

There is some history here, in that my dad has always tried to give us money equally through our lives...so even for him this is an unusual move. And I can tell my sister is also worried about what it could mean in the future, even while this money would allow her to just enjoy the time she has left with BIL and take care of him as he needs it with less stress. Since my dad brought it up, her stress levels have decreased substantially.

But I am trying to also look ahead, and since it's coinciding with MIL's decision, it seems like a good time to think through the long-term consequences objectively.

[Anonymous]

(Much, much smaller estate)… My sibling has severe mental illness. our parents are both gone, and left their estate to us 50-50. I am giving my sibling some of my share, and holding more back in case he needs it. He’s had a much harder road in life, and it would pain me deeply (as well as my parents) to know he was suffering financially. He is single, whereas I have a spouse with a solid HHI and in-laws who may pass along a modest inheritance.

[Anonymous]

Anonymous wrote:(Much, much smaller estate)… My sibling has severe mental illness. our parents are both gone, and left their estate to us 50-50. I am giving my sibling some of my share, and holding more back in case he needs it. He’s had a much harder road in life, and it would pain me deeply (as well as my parents) to know he was suffering financially. He is single, whereas I have a spouse with a solid HHI and in-laws who may pass along a modest inheritance.

Thanks for sharing your perspective, and I'm sorry for your losses.

Do you think that it's better that your parents left you an equal estate and you made the decision to support your brother? TBH, I think that my brother might prefer this approach, but I would rather my parents make some of these decisions in their lifetime. Mostly, I'd be afraid of being in a situation of having to figure out a reasonable allowance for my big sister, but maybe that's the wrong way of looking at it.

[Anonymous]

Talk about it openly and honestly now, while everyone is alive and well. My parents talked to my siblings and I when we were in our early 20s - asked us what we wanted (we said split 33.3/33.3/33.3). They asked, what if one of you has a child with special needs we said we'd deal with it if and when it happened. And they discussed this with us over and over again over the years. We're all happily married and none of us has a special needs child. One of the three is extremely successful (not just rich, but wealthy), the other 2 are comfortable. We still say split it 3 ways (it being about 6 million).

[Anonymous]

Anonymous wrote:Thanks 21:20 for the quick reply.

I realize my title is unclear, because the funds would be dispersed now...but they would otherwise be in our inheritance. In MIL's case, there is some financial/tax reason that DH is trying to understand. For my parents it's because my dad had an investment (that was money he was saving for all of us) unexpectedly pay out a large amount, and my sister is facing an extreme hardship (she is SAHM and BIL has terminal illness), so he wants her to give her some extra security now.

Given that these funds are being dispersed now (i.e. won't be accounted for in the will), is there somewhere to document what is being done and why? Both sides (MIL and my parents) are clear that this is money that would otherwise have been willed to their kids equally.

There is some history here, in that my dad has always tried to give us money equally through our lives...so even for him this is an unusual move. And I can tell my sister is also worried about what it could mean in the future, even while this money would allow her to just enjoy the time she has left with BIL and take care of him as he needs it with less stress. Since my dad brought it up, her stress levels have decreased substantially.

But I am trying to also look ahead, and since it's coinciding with MIL's decision, it seems like a good time to think through the long-term consequences objectively.

PP you replied to. This is what my MIL has done as well, and since all her kids are honest people, what's worked is good record-keeping, as I mentioned. Each time they all decide on a transaction, they all sign letters of agreement, with reference to final inheritance totals for each person. Everyone gets sent a copy and acknowledges they received it. So far, no lawyers have been involved on that side of the family. It's just that their affairs are complex, some siblings were loaned money and have only partially paid MIL back, there's interest to consider, and people forget what already happened, which pot the money came from, who it went to, etc. Every once in a while, someone will misremember something (always in their favor), and someone else will dredge up the relevant paperwork, to refresh people's memories.

[Anonymous]

I have a special needs child who is high functioning. My parents wanted to leave a larger part of their estate to my child, and my sibling who has kids of their own was fine with it. However, these are the only cousins my child sees on a more regular basis. I do not want relationships with their cousins to be an issue down the road with an unequal inheritance. I asked my parents to keep it equal.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Thanks 21:20 for the quick reply.

I realize my title is unclear, because the funds would be dispersed now...but they would otherwise be in our inheritance. In MIL's case, there is some financial/tax reason that DH is trying to understand. For my parents it's because my dad had an investment (that was money he was saving for all of us) unexpectedly pay out a large amount, and my sister is facing an extreme hardship (she is SAHM and BIL has terminal illness), so he wants her to give her some extra security now.

Given that these funds are being dispersed now (i.e. won't be accounted for in the will), is there somewhere to document what is being done and why? Both sides (MIL and my parents) are clear that this is money that would otherwise have been willed to their kids equally.

There is some history here, in that my dad has always tried to give us money equally through our lives...so even for him this is an unusual move. And I can tell my sister is also worried about what it could mean in the future, even while this money would allow her to just enjoy the time she has left with BIL and take care of him as he needs it with less stress. Since my dad brought it up, her stress levels have decreased substantially.

But I am trying to also look ahead, and since it's coinciding with MIL's decision, it seems like a good time to think through the long-term consequences objectively.

PP you replied to. This is what my MIL has done as well, and since all her kids are honest people, what's worked is good record-keeping, as I mentioned. Each time they all decide on a transaction, they all sign letters of agreement, with reference to final inheritance totals for each person. Everyone gets sent a copy and acknowledges they received it. So far, no lawyers have been involved on that side of the family. It's just that their affairs are complex, some siblings were loaned money and have only partially paid MIL back, there's interest to consider, and people forget what already happened, which pot the money came from, who it went to, etc. Every once in a while, someone will misremember something (always in their favor), and someone else will dredge up the relevant paperwork, to refresh people's memories.

This is a good idea. Whatever we decide (keeping inheritance equal around what's left of the estate or not), this could be a good way to handle this out in the open. Though, my dad has always managed everything through trust in him, so it would require him to behave differently. I am sure my brother would prefer this.

[Anonymous]

Will the estate be over the estate tax limit? If so there could be consequences to consider. It’s easy now for your parents to each gift your sister and her spouse $19,000 (so, $19K x4) per year. If they want to give more, they should fill out a gift tax form as it would count against the estate for federal taxes.

[Anonymous]

I don’t think there is anything to be done. Your parents are alive and free to spend their money as they see fit. That said, if they want to change the parameters of their will to draw down from a sibling’s portion, that’s their purgative, but outside of that there isn’t anything you need to do. I’m not sure what “long term consequences” you’re referring to unless you’re talk about harmony between the siblings.

FWIW, I’m also the wealthier sibling and my parents have absolutely given both of my siblings more money through the years but their will designates 3rds.

[Anonymous]

Anonymous wrote:I don’t think there is anything to be done. Your parents are alive and free to spend their money as they see fit. That said, if they want to change the parameters of their will to draw down from a sibling’s portion, that’s their purgative, but outside of that there isn’t anything you need to do. I’m not sure what “long term consequences” you’re referring to unless you’re talk about harmony between the siblings.

FWIW, I’m also the wealthier sibling and my parents have absolutely given both of my siblings more money through the years but their will designates 3rds.

Ugh, prerogative

[Anonymous]

Anonymous wrote:I don’t think there is anything to be done. Your parents are alive and free to spend their money as they see fit. That said, if they want to change the parameters of their will to draw down from a sibling’s portion, that’s their purgative, but outside of that there isn’t anything you need to do. I’m not sure what “long term consequences” you’re referring to unless you’re talk about harmony between the siblings.

FWIW, I’m also the wealthier sibling and my parents have absolutely given both of my siblings more money through the years but their will designates 3rds.

This. They are still alive and chosing to provide some of their current assets to your sister. This is irrelevant to an inheritance after they die. Frankly this shouldn’t be up for debate. If they have the assets to help your sister, it’s solely their decision to make.