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Seeking advice on estate

Tamara's picture

Seeking advice on how best to manage the estate of my husband who passed away. Summary - together for 20 years. He had 2 older kids (now 35 and 40) and we had 2 bio children together (BD 19 and BS 24). When we became a couple the main asset he had was some family property which was since sold and he received funds from the sale of these properties. Together we owned a house, an income property (which was our previous home) and a cottage (with a mortgage). He had a modest amount of savings and also some modest debt.There is also an additional fund managed by spouse's siblings to support their stepmom. These funds came from sale of husband's fathers house. There will most likely be funds remaining.

My objective is to maintain generally good relationships with adult step children and also to be fair to myself as a surviving spouse, fair to the kids that we had together and fair to the adult stepkids. I am currently working; spouse left a small monthly pension + some savings and the funds from the family properties he received prior. I am the executor of the will and will inherit everything. Unfortunately before he passed we did not discuss what his expectations were in terms of what he wanted to leave his 2 adult children. He was very close to them.  

A few questions come to mind - I thought that perhaps I could divide the funds from the sale of my spouse's family properties with either  a) his two kids or b) the 4 kids together. What is the fair decision? Should the other funds managed by the siblings go to just his kids or all 4 kids? Do I have a right to any of the funds as the surviving spouse? The matter is somewhat complicated by the fact that I have my own income property which, when sold at some point in the future, will provide some additional funds to me along with an eventual amount from my mother. My sense is that the stepkids feel that I will have these funds so I should maximize what they get (although this has not been articulated - it is just my impression) Also would it be better to share the money now (my thinking) or later? (although some of it is tied up in registered retirement funds so I may not be able to give it away now anyway due to tax considerations.  Welcome any and all thoughts on how best to manage this situation given the senstivities involved in money and stepfamilies.

 

Comments

The_Upgrade's picture

You could approach it as 50% goes to you and the remainder gets divided evenly amongst all 4 children. Then whatever's yours will go to your two children down the track. The other two will inherit from their own mother. Also keep in mind you may lose out on the relationship with the steps regardless of how you split it if they're of the mindset that everything belonging to their dad is theirs. Have you consulted an estate lawyer?

lieutenant_dad's picture

My approach would be:

1.) Anything acquired before you two married was "his" property, not joint property that you'd have access to. It sounds like that would be money he received from his family. That money should be split amongst his biological children. It sounds like he has 4 biological children, so that gets split 4 ways.

2.) Joint assets are a little trickier. I think the reasonable approach would be to pay off the debt he incurred and his portion of the mortgage. That may not be a 50/50 split. If he was paying 30% or 70% of the bills while he was alive, then that percentage should be paid out/down as much as possible on those assets. His children can then benefit from the sale of those assets in the future based on the percentage "ownership" he had (e.g. if he paid 40% of the mortgage, then 40% of the sale of the house would be split amongst his 4 kids, and the remaining 60% would be split amonst your two kids). Don't feel like you need to sell the houses or give the kids cash NOW just because he died. If you were their mother, they wouldn't see any money until you passed. Make sure your joint bills and assets are paid - and paid up - before deciding if there is any cash left to give to his kids. With mortgages and other debts, there likely won't be.

3.) Your portion of any joint assets AND "your" assets you inherited prior to marriage or even during marriage that are yours are yours to do with as you please, just like his were his to do with as he pleased. If you want to donate your assets upon your death to a cat charity, you can. If you're wanting it to remain an inheritance, then you're under no obligation to include your SKs in that inheritance. Remember, your SKs have a mother and maternal family. Even if Mom and her family don't have money to pass down, that isn't your problem. You would be 100% morally right, in my eyes, to leave your portion of the assets to be divided up between your two children. If you want to leave some to your SKs, that's okay, but don't feel obligated to.

Remember, you're still alive and could live several more decades. Don't start trying to sell joint assets so his kids can have money now, or signing over savings accounts and pensions to them. Pay down his debt and his portion of your mutual debt then go from there. If he has an account earmarked for his kids, make sure ALL his kids benefit from it, not just his kids from his prior relationship. If you need help further figuring this out, talk to a financial advisor who can help you with more specific questions.

notarelative's picture

First: You don't have to do anything now. Take your time. Think carefully.

Second: Whatever is your husband's portion, if you decide to divide it, should be split between all four of his children.

Third: Consult an estate or tax lawyer before you make any decision or speak to the kids. If property or money was not dealt with in the will, there may be tax consequences (federal or state) to giving children money. 

Fourth: Do not give away money that may be needed for your care. You can structure your will so that they receive the money after your death (if there is any left). 

justmakingthebest's picture

I personally believe everything goes to the spouse financially. The adult Skids can have sentimental items, if you would like to give them some funds you can, but we are supposed to make sure our spouses are cared for upon our deaths. 

I would put provisions to give to my stepkids upon my death but I would not give equally to them as my bios. For example: 1/3 each bio, 1/3 between the adult stepkids. 

JRI's picture

Let me give you some perspective from a person who is managing a 97yo's estate.  My 97yo mother is in long-term care.  It is costing almost $10,000 PER MONTH.  

I would keep everything and not distribute any assets now.  You might need this kind of care, too.  Perhaps you will decide to have it all split evenly among all the kids when you pass.  But I wouldnt distribute any assets now.

The best thing you can do for all the kids is to make sure none of them have to take care of you.  Keep it in your name until you pass.

JRI's picture

I'd be liquidating that property.  Its cash you will need.  You're also doing your heirs a favor to make it cash rather than property.  I bless my mom every day for doing this.  

Thumper's picture

^^^oh my gosh yes. My mother was in assisted living. It is unbelievable the cost. My Uncle who passed away a few month's ago was around the same as your Mom.  ITS crazy.

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OP I am sorry about your husband passing away. I am also sorry you have to make these decisions. Please take your time and consult with a lawyer.

 

ndc's picture

Your husband left it to you.  I would not distribute anything, except for personal items, other than through your will or, if desirable for tax purposes, through gifts over time to all four children after consultation with a tax/ estate lawyer.  There are lots of alternatives for your will, but I personally would probably split remaining assets acquired in the marriage or by you between your two children, and remaining pre-marital assets among the four children. You'll want to speak with an expert to make sure you do it in the most tax- effective way. 

Wilhelm's picture

It was left to you. Expenses in the future can be very uncertain. You may need this money or any one of the children may fall on circumstances where you are required to help them.
If the children need money for a house deposit or to get them started in life I would consider helping them out. 
I would give all of the children a small amount that you can afford perhaps enough for a car .

Harry's picture

Not know what life has in it for you. You may need that money to have a place to live and eat.  After your death you can lrave it to the kids. Bio get 2/3. And SK get 1/3.  Because you made some of that money,  you did not earn money for SK.  Also SK have a BM who is going to leave them money. 

tog redux's picture

I'm with the others - it all stays with you for the rest of your life, to be divided how you choose between the 4 kids.  Sit down with a lawyer and he/she can help you sort that out.  If more of the money is yours, more should probably go to your bio kids.

The kids can wait until you die to get any money.  That's how it works in first marriages, and that's how it should work in second/third marriages.

Tamara's picture

A long overdue thank you to everyone that shared their perspectives on my question. Much appreciated! Tamara

yerixo's picture

The fairest thing to do would be to divide your late husband's property with his children. You could sell his property and divide the money equally between you and his children. I think this is the fairest approach, as I read about it on  http://propertypressonline.co.uk/  . A family there decided to divide the house between three people. None of them were going to live in that house as three families, so they just sold the house and legally divided all the proceeds with the help of a good lawyer. They also split the money from the sale of their parents' two cars.