Questions about minors inheriting money

[*LC]

 

I promise I'm not looking for legal advice, just any suggestions or BTDT advice.

 

Here is the convoluted scenario: my children are the heirs of a deceased person who is still named as a 50-percent heir in the will of a recently deceased person. The executor of the estate is the other 50 percent heir. The recently deceased did not have any additional heirs.

 

The executor is in a hurry to settle/probate/whatever the estate and split it among the heirs. I do not know exactly how much is in the estate, but there is some money, some land, some possessions, and a house. When you divide the amount in two, it is is a nice inheritance.

 

However, when you divide half by the number of kids I have, I'm guessing each kid will receive enough to buy a car or pay for a year (or less at some schools) of college.

 

I don't want my kids to have the money right now as most of my kids are minors/not old to drive/etc. I am not even in favor of them receiving the money when they turn 18.

 

Two of my kids are over 18. One is a college graduate with a job that pays bills/savings/fun. She is the only one that knows about the inheritance and is fine waiting for it; thinks it would be a good down payment on a house one day. One is in college with access to a car. Scholarships take care of almost everything at college and I can handle the rest. IF given the money today, this kid would probably give it all away. (Of course, that is not a bad thing, but it would make more sense down the road.)

 

The rest are minors.

 

The executor does not have children and probably has not thought through the implications of giving money to minors/young adults. How do I bring this up? What do I suggest? Trusts for each child? Can the estate pay for trusts for each child as trusts are not in my budget?

 

I know when my parent was the executor for an elderly relative's estate that he never probated it. The relative was more than 100 and the court wouldn't accept the out-of-state will that was more than 50 years old. (There was a reason, but I don't remember it exactly.) Since my parent was on all financial accounts, the court clerk basically said the estate did not need to be probated. My elderly relative did not have any children, and my parent was the primary heir and had cared for/made all decisions for the relative for more than a decade. There were two cousins who both were willed a lump sum/silverware/jewelry; my parent made sure they got what the will said they would get.

 

Is that a possibility in this case? I trust the executor completely, who does not need the money, and is on all accounts. The executor is an accountant, so I think this would be a hard sell.

 

I know this is a good problem to have, but things are so crazy right now that I just don't have time/brain power to handle it. Things will not be any less crazy until 2018, and the executor wants to settle everything before then. Don't know if it matters, but the recently deceased lived out of state and so does the executor.

 

I am open to all suggestions. Thanks.

[Sneezyone]

If the heirs are over 18 and competent, you don't really get a say. If they're under 18, the money could be put in some kind of trust account for their benefit.

Edited October 5, 2017 by Sneezyone

[Arcadia]

I definitely don’t know the legal aspect of it. What I was told by the bank is that the parents or the guardian (if both parents passed) would hold in trust the money until the child turns 18 years old. If the child is over 18, then the money goes to the child. However I could stipulate that the money be disbursed later in my will but that is only for my assets. So I can’t withhold money that my kids inherit from someone else if they are already 18 years old.

 

My aunts had put 25 or 30 years old for their grandchildren to get money when they passed. The reasoning is that the grandchildren would likely use the inheritance to pay down mortgage or as part of their down payment. My cousins and nephews tend to marry at around 28 years old which is why 30 years old for inheritance make sense to my aunts. I believe they use trust funds but I didn’t ask for details.

[Bootsie]

If I am understanding your post correctly, Person A died leaving 1/2 to Person B and have to Person C.  Before those assets were dispersed, Person B died and your children are Person B's heirs.  Is Person C the executor for both Person A and Person B?  

 

Was their any stipulation in Person B's about the management of your children's inheritance?  If there was not something specifically stated, the children over 18 will probably receive any inheritance at the time of disbursement.  

[*LC]

If I am understanding your post correctly, Person A died leaving 1/2 to Person B and have to Person C. Before those assets were dispersed, Person B died and your children are Person B's heirs. Is Person C the executor for both Person A and Person B?

 

Was their any stipulation in Person B's about the management of your children's inheritance? If there was not something specifically stated, the children over 18 will probably receive any inheritance at the time of disbursement.

Sorta. A chart would make this easier, but I think A.B,C will help.

 

Person's A named Person B and Person C as equal heirs the estate.

 

Person B died BEFORE Person A, but Person A had never changed the will. My children are Person B's actual heirs, but were not heirs to Person B's will, because everything went to the spouse. Person C was not the executor of Person B's estate.

 

In the little looking online I have done, it looks like you can set up a trust for an adult. The first question is can the executor do that for adults? What about minors? The second question is does it make sense to do this?

[Bootsie]

Sorta. A chart would make this easier, but I think A.B,C will help.

 

Person's A named Person B and Person C as equal heirs the estate.

 

Person B died BEFORE Person A, but Person A had never changed the will. My children are Person B's actual heirs, but were not heirs to Person B's will, because everything went to the spouse. Person C was not the executor of Person B's estate.

 

In the little looking online I have done, it looks like you can set up a trust for an adult. The first question is can the executor do that for adults? What about minors? The second question is does it make sense to do this?

So, Person B died and left everything to a spouse.

 

Then Person A died and had a will that stated Person B (now deceased) and Person C should split the inheritance.  Was there anything in that will that stated what was to happen if Person B or Person C was no longer alive?  From what you stated I am not sure how your children are now the heirs.  

 

It will be important to know how Person A's will was worded (and how the specifics of the laws in the state of Person A).  

 

In most situations, anyone over 18 is an adult and if an adult inherits money, the adult get to make the decision on what to do with that money.  You would not be able to dictate (nor would the executor get to decide) that the money goes into a trust (unless the will specifically stated a trust be established.)

[Arcadia]

How about setting up 529 college funds for the minors?

You may not be able to do that. The inheritance is held in trust for the child until he/she reach legal age and take over the responsibility.

 

I have ITF custodial accounts for each of my kids that would go to my minor kids if I die. My husband won’t be able to use those funds to open up 529 accounts for our kids.

[livetoread]

I have a 19 yo. If he came into a fair amount of money, I would tell him we will set up an investment fund for him and the money should be used for "x". When the time for "x" comes, he can have the money. In our case, "x" would probably be a down payment on a house. We would not lie to him about his legal access but nor would we volunteer that info. We'd probably give him 10% or so up front for whatever he wants, and we would deal directly with the executor, while walking our son through what is happening.

 

He almost certainly would go along with this because he is pretty good about money and trusts us financially too. If he insisted on getting it though, we'd give it to him.

[Arcadia]

I have a 19 yo.

...

We would not lie to him about his legal access but nor would we volunteer that info.

...

If he insisted on getting it though, we'd give it to him.

When my legal age niece inherited money, the executor informed her directly. The parents do not get to know how much their adult child inherit if the parents are not involved in the will hearing. The information and the money does not pass through the parents. My parents are thinking of gifting some money to my kids but do not want my kids to get them at 18 years old so they would have to stipulate that in their wills. Edited October 5, 2017 by Arcadia

[Liz CA]

Something similar happened in our family but the money was held in trust until ds turned 18, then it was disbursed. We were not asked or given a choice if this is what you are wondering. For minors, I would think the funds will go into a trust automatically but you may have to consult an attorney.

[Sneezyone]

So, Person B died and left everything to a spouse.

 

Then Person A died and had a will that stated Person B (now deceased) and Person C should split the inheritance.  Was there anything in that will that stated what was to happen if Person B or Person C was no longer alive?  From what you stated I am not sure how your children are now the heirs.  

 

It will be important to know how Person A's will was worded (and how the specifics of the laws in the state of Person A).  

 

In most situations, anyone over 18 is an adult and if an adult inherits money, the adult get to make the decision on what to do with that money.  You would not be able to dictate (nor would the executor get to decide) that the money goes into a trust (unless the will specifically stated a trust be established.)

 

Agreed. It seems to me that the spouse of person B would be the heir unless person A specified your children as alternatives in the event person A or B predeceased him/her. Did an attorney confirm that your children are heirs?

[Alessandra]

Sorta. A chart would make this easier, but I think A.B,C will help.

 

Person's A named Person B and Person C as equal heirs the estate.

 

Person B died BEFORE Person A, but Person A had never changed the will. My children are Person B's actual heirs, but were not heirs to Person B's will, because everything went to the spouse. Person C was not the executor of Person B's estate.

 

In the little looking online I have done, it looks like you can set up a trust for an adult. The first question is can the executor do that for adults? What about minors? The second question is does it make sense to do this?

I'm confused. What do you mean when you say that your kids are the 'actual heirs' of person B, but are not named in person B's will. That is confusing. In any case, in most states, a spouse has a statutory right to a certain percentage of the estate, providing there was not a pre or post nup to the contrary. Is person B the kids' father, in which case they could have a statutory right to some percentage of the estate?

 

As for kids getting money, in my experience, kids over 18 get the money, without your being able to control how. In the states that I am familiar with, minors would be more complicated. If there is nothing in any will about trusts, etc, the state will hold the money in a bank account until the child reaches 18. You do not get to control or invest it. You may have to file for guardianship of the property in order to claim your minor child's inheritance. You may have to post a bond. In some states, the natural parent is not automatically guardian of their own kids property in the kind of situation you describe. Your state could be *totally* different, lol.

 

So you have two questions, imo. One is whether your kids inherit anything -- did I misunderstand the part about heirs, but not being in will?

 

The second question is how kids would inherit if they were entitled to, start by googling for the state in which the deceased lived. If you can physically go to the surrogate's court there, ask the people there.

 

**** I am not an attorney. I have friends who have been through this in other states than mine, so sharing that limited experience. But everything varies by state, so my only advice is to find out about the decedent's state specifically. I am guessing that you do not want an attorney at this point, which is why I suggested contacting the surrogate's court. The will also have files about whether the executors for person A or B have filed any intention to probate. A copy of the will might give you a clue as to the size of the estate.

 

ETA

How did you find out about this? Did an attorney send you any documents. Often, it is a requirement that all possible relatives of a deceased be contacted, but that is not the same as being entitled to an inheritance.

Edited October 5, 2017 by Alessandra

[Twolittleboys]

Not a lawyer or anything but I think that if A did not specify that B's portion was to go to your kids in the case of B pre-deceasing A? If not, I think everything would go to C as dead people can not inherit (at least not in most jurisdictions). And if B had inherited (i.e. had not died first) it would have been part of B's estate on B's passing and if your kids were not the heirs of B they wouldn't have gotten anything either.

 

Maybe I am misunderstanding but it seems like you are saying that A's money would go to B (even though B is already dead) and then to B's natural heirs (e.g. nearest living relatives) as B's will had already been propated when B died. I do not think that is how it works.

 

However, if A did not make a will it might work out. If for example B and C are children of A and B is a parent of your children. Then the estate without a will would be divided to the two children and in the case of the deceased child would go on to the next generation (Maybe, I think). This might of course also work if the will states the money to be split between A and B or their descendants. 

[Pawz4me]

State laws vary. Here I think it would work like this --

 

The executor of the estate your children are supposed to inherit from would have to list on the court/probate filings any and all monies due to the estate. That would include anything the deceased should inherit from the other deceased person. The executor has to update the paperwork every six months until the estate is fully settled. So if it's done right the total value expected to be received from the other estate should be included in the paper work of the estate your children stand to inherit from. That estate would not be allowed to be settled/closed out until the other estate is settled. But your kids may not be heirs to that estate. It depends on how the other will was worded. Did it mention the person's estate if the person was already deceased? If not your kids may not be entitled to any of that.

 

In the estate your parents handled -- If ALL assets (checking and investment accounts, cars, land and houses, etc.) were already in their name jointly with the deceased then technically the deceased had no estate and there was nothing to probate. That's essentially what happened when my father passed away. Everything he owned of value was jointly held either with my mother, my brother or I. Legally my father died w/o any assets/estate even though he was very comfortably well off. He had made some monetary bequests in his will to other people. My brother and I (the estate executors) were told that we didn't have to honor those bequests because legally there was no money in his estate to pay them. We chose to honor them anyway. Legally we didn't have to but it was what our father had wanted.

 

As far as your kids -- 18 is an adult every bit as much as 50 is an adult. If your 18 or over children inherit anything there is nothing legally you can do to control it. The executor of the estate can't, I don't think, set up trusts or 529s or anything like that unless those are specified in the will or unless the will expressly grants him the right to decide how to handle disbursing the inheritance to them.

 

With the caveat that I'm not an attorney, nor do I play one on TV, and these things are complicated. Wording in the will matters as does state law.

Edited October 5, 2017 by Pawz4me

[slackermom]

Dh is an attorney who occasionally handles estates. I sometimes type up the paperwork. Rules about inheritance are state specific. In our state, it would not matter who is listed in B's will; since he predeceased A, the money from A never goes into the estate of B. Instead, it goes to B's descendants.

 

Editing to add that in the cases in which a minor (under 18) was inheriting, a guardian, usually the parent, was required to sign all the paperwork on the minor child's behalf. The guardian was the one responsible for setting up an account for the funds, and we mailed the guardian a check.

Edited October 5, 2017 by slackermom

[EMS83]

Try a bond, COD, or money market, if  possible?  And I don't know why trust fees wouldn't come out of the fund itself?  Just random thoughts I'm throwing out there; they may not apply.  I'm sorry for the losses and complications.   :grouphug:

[LinRTX]

We went through this just recently. My son left quite a large sum of money to my daughter (17 yo) when he died. It went into a custodial account. She cannot touch the money until she is 21 without our permission. she has two accounts -- one her dad is custodian on and one I am. But at the age of 21 she gets all the money. We are in Texas, so the age of 21 is due to state rules. In other states it may be 18.

 

Hope this helps.

 

[Ravin]

You may not be able to do that. The inheritance is held in trust for the child until he/she reach legal age and take over the responsibility.

 

I have ITF custodial accounts for each of my kids that would go to my minor kids if I die. My husband won’t be able to use those funds to open up 529 accounts for our kids.

 

A guardian holding money in trust can do just about anything they like with it. Now, the minor can turn around and sue them for it later, but in practical terms, things like this can happen:

 

My BIL (DH's half-brother, same mother) inherited money and a house from his paternal uncle and his father, both of whom died when he was in his teens. My MIL became the trustee of his inheritance. The law or the will (not sure which) made this the status quo until he was 21 because he was a college student. MIL sold his house (while my DH was living in it, mind you) in order to pay off her own mortgage. She also blazed through his assets, resulting in his having to drop out of college after one year because the money was gone. She later sold the house at the worst possible time and bought herself a tiny condo in a remote town. BIL's best hope to see any of what should have been his at this point is to wait hope that she either dies intestate (which would leave everything to DH and him) or puts him in her will (he wasn't willing to sue his mother and the statute of limitations has likely run by now anyway) and there's anything left (given MIL's health issues, unlikely).

 

Now, as far as your kids, you can probably put their inheritance into trust accounts without spending much money, set up to give over to them when they turn 18 or 21 depending on state law. As a practical matter you can do just about anything you don't think your kids would try to sue you for later. Whatever happens, you will be hard put to be more irresponsible with your kids' money than my MIL!

Edited October 5, 2017 by Ravin

[Ravin]

Dh is an attorney who occasionally handles estates. I sometimes type up the paperwork. Rules about inheritance are state specific. In our state, it would not matter who is listed in B's will; since he predeceased A, the money from A never goes into the estate of B. Instead, it goes to B's descendants.

 

Editing to add that in the cases in which a minor (under 18) was inheriting, a guardian, usually the parent, was required to sign all the paperwork on the minor child's behalf. The guardian was the one responsible for setting up an account for the funds, and we mailed the guardian a check.

 

This is basic Decedents Estates stuff, and doesn't vary much between most states because it's based on English estate law which originated in the 12th century.

[Lanny]

I read all of post #1 and a couple of other posts. This seems to involve something I tried to avoid, when writing my first Will in TX.  State laws vary, from state to state, so how this is worded, may change, from state to state.

 

I made stipulations, such as, "100 percent to this person, if living at the time of my death" and then there were Contingency options, so that if one person had passed away before I did, it would not go to their Estate, but to the next Contingent Beneficiary. 

 

When moving from one state to another state, within the USA, one needs a new Will to comply with the State Laws and procedures in the state where they are a Legal Resident.  

 

The same applies if one moves from one country to another country. 

 

Good luck to the OP and her family on this.

[2ndGenHomeschooler]

My sisters and I and our cousin were the beneficiaries of our aunt's estate/life insurance. At the time we were ages 9, 20, 21, and 25. Our parents had no say in what happened with the money for the adults and very little for the 9yo. The older three of us were mailed checks directly. My 9yo sister's money was sent directly to the court in our state. My dad had to go to court (whichever one handles that stuff) and the money was put into an account that my dad recommended and the judge approved of. That was the extent of my parents' involvement. Until she was 18, if my sister ever wanted any of the money she had to ask the court/judge in writing and then provide receipts for purchases. Once she turned 18 the money was hers without restriction. Some of this is state specific of course, but that's our experience.

[Lanny]

I took a quick look at all of the posts that were above my first reply. Some of them indicate there seems to be a possibility that the DC of the OP are not Heirs. I think the OP should contact an Estate Attorney in the state where the Deceased passed away and pay him/her to read the Will and see if the DC of the OP are Heirs or not.  

[JustEm]

Like others, I don't think your children are heirs. Or at least the way you have worded it, it does not sound like they are legally going to inherit any money

[JustEm]

So person B's estate goes to spouse. And person A's estate goes to Person C entirely. B's estate doesn't get anything from A because B died first, unless the will specifically mentions what happens if B dies first.

[BarbecueMom]

So person B's estate goes to spouse. And person A's estate goes to Person C entirely. B's estate doesn't get anything from A because B died first, unless the will specifically mentions what happens if B dies first.

If the above is correct, and Person C is willing to maintain the "spirit" of the will by making sure the children of Person B obtain half of the inheritance, could Person C establish a trust for B's children with 50% of the inherited funds? It might work out better this way, if the trust stipulates that the young adult children cannot access the funds until later. If the young adult children of Person B inherit directly, they would be free to spend the money as they please, correct?

 

Obviously this gets into more complicated tax scenarios. And if Person C isn't willing to split the inheritance, then it's a moot point.

[Alessandra]

Here's a nicely written bit about A, B, and C.

 

https://www.thebalance.com/predeceased-beneficiarys-share-of-estate-3974787

 

Again, states vary. And Louisiana can be very different.

Edited October 5, 2017 by Alessandra

[StephanieZ]

Dh is an attorney who occasionally handles estates. I sometimes type up the paperwork. Rules about inheritance are state specific. In our state, it would not matter who is listed in B's will; since he predeceased A, the money from A never goes into the estate of B. Instead, it goes to B's descendants.

 

Editing to add that in the cases in which a minor (under 18) was inheriting, a guardian, usually the parent, was required to sign all the paperwork on the minor child's behalf. The guardian was the one responsible for setting up an account for the funds, and we mailed the guardian a check.

 

Yup. 

 

Since Person B died first, the only things your kids would inherit would be their share of Person's B estate at the time of Person B's death. Person B's inheritance from Person A never happens at all, since Person B died first. Unless Person A (last to die) has named your kids as heirs, then your kids (as Person B's heirs) would not inherit anything from Person A's estate. 

For example, in my will/estate documents, DH gets everything if I die first. The kids get everything (split up and in various trusts) if DH is already dead when I die. If I died even one minute or hour before DH, then he'd have inherited everything from me, and the kids would only get whatever DH's will says they'd get. 

 

(Everything stops the moment somebody dies. Even if somebody has signed a check 4 days before their death, if you haven't taken it to the bank before the date of death, that check is no good. In fact, the bank will ultimately REVERSE all transactions that occur after the date of death. I know this for an absolute fact, as it happened in my mom's accounts, with automatic payments that happened after her death being reversed after her death date had been reported.)

 

 

Alternatively, say dh was already dead, so I now had "it all", and then I died, leaving everything to my 3 kids. My will specifies what happens if any of my kids are no longer living (as I think any proper will would). In my case, it says that, then, their share (1/3) of my estate would be split "per stripes" among that deceased child's heirs. (That means, if my kid had 2 children, then that deceased child's 1/3 would be split 50-50 among that child's heirs. Meaning each grandchild would get 1/6. But if the child had created 3 grandkids, they'd each get 1/9 instead of 1/6.) It also specifies that if the child dies w/o heirs, then their share (1/3) goes back into the estate and is thus just split among my surviving kids, so then my surviving 2 kids would each get 50% of my estate instead of 1/3. I've updated our wills several times over our lives, and every time, this sort of language is in place, so I'm guessing it's routine. 

 

My guess is that unless Person A -- the LAST person to die -- had named your kids as heirs, your kids won't inherit anything from Person A's estate. Your kids will inherit whatever their proper share was of Person B's estate -- AT THE TIME OF PERSON B's DEATH. Person B cannot inherit anything from anyone when Person B is already dead. 

 

If your kids do inherit anything, then definitely talk to the estate attorney and/or executor and get the written will . . . to insure you adhere to the laws. If your kid is 18+, unless a trust was *created by the will in question* you cannot interfere with your adult child's access to the money. Once they are 18, it's the same as if they were 58. Their money, not mom and dad's. Period. If your kids are under 18 when they inherit, then you can presumably control their money (but NOT spend it on normal support, in my understanding), but rather you can stash it in some safe and prudent investment account until they are 18. Once they are 18, it's theirs, period. You cannot put it in a trust that would prevent them from complete access/control at age 18, again, *unless the will creates a trust or trusts*. 

 

My kids inherited a bit from my mom's estate, and we put their funds into Trusts that they can't access until age 25 (but we could access it before then, if we needed to, but again, not to provide their routine support  . . . but, say, if they were going to grad school and wanted it for that or for a car when they are adults, etc.) We could only do this because my mother's will/trust documents (multiple documents) established these "grandchildren trusts" in the will. As such, we were/are legally obligated to follow the intent of the will. Once they are 25, they will have full access to the funds. Meanwhile, they sit and grow. So, I've got the years between now and when each hits 25 to ensure they are as responsible and competent as possible. 

 

In my own estate/trust planning, with much larger funds involved since we are young and have huge insurance policies, the trust that will be generated if dh and I both die anytime soon (before our kids are fully competent and independent to handle a huge sum of money), the trusts would be set up to provide access to chunks of the money over many years, to age 45 or so IIRC, so if one (or all) of them is stupid with money at 25, then they'd have another chance at 30, 35, etc. (And the trustee who administers the trust meanwhile can distribute it for education/medical/other needs as well, so they'd essentially have access to the support that Mom and Dad would have provided, even after we're dead.)

 

I'm not a lawyer. Definitely engage an attorney to figure these things out. 

[lavender's green]

I think if your kids do get the money (which sounds a little iffy and highly dependent on the state and the wording), all you can do is have discussions about smart financial decisions. Maybe whip out a chart showing how much interest an account will gain over the decades if they want to start a retirement nest egg. Compare that with a car that loses a significant chunk of value once it's driven off the lot, and will become a beater sooner or later. Also point out what a house in your area costs, what it costs each year (an important one! I know people who bought a big fancy house with their inheritance and a few years in realized they couldn't stay on top of property taxes and basic maintenance with their income!), and what the down-payment would likely be.

[Lanny]

OP I suggest to you that ASAP, you get a photocopy of the Will of the person you think your DC may be Heirs of. Then, investigate whether or not your DC are mentioned as Heirs of that Estate.  Possibly they are. Possibly they are not. It may not be Black & White. It may require a Probate Judge to make determinations...

 

[Guest]

I think if your kids do get the money (which sounds a little iffy and highly dependent on the state and the wording), all you can do is have discussions about smart financial decisions. Maybe whip out a chart showing how much interest an account will gain over the decades if they want to start a retirement nest egg. Compare that with a car that loses a significant chunk of value once it's driven off the lot, and will become a beater sooner or later. Also point out what a house in your area costs, what it costs each year (an important one! I know people who bought a big fancy house with their inheritance and a few years in realized they couldn't stay on top of property taxes and basic maintenance with their income!), and what the down-payment would likely be.

 

 

Yes, this.  And the thing you should also remember is that an inheritance of $10-20K involves a different level of discussion than an inheritance of $100s of K.  Low tens of thousands of dollars can be recovered in a person's lifetime.  Hundreds of thousands, much harder to make up.  If a kid blows all of the low tens, that can be a learning experience.  If a kid blows all of hundreds, that is a big mistake, one that encompasses a LOT of missed opportunities for all of one's life--things unforeseen.

 

I'm telling you this NOT to say you should tell your kids to feel free to blow the money.

 

I think there is room in both scenarios for a little bit of kicking up your heels to do something you could NOT have done without the inheritance.  Maybe some travel or a pretty piece of jewelry.  Or some nice stereo speakers.  

 

It seems to me that if bluebirds like inheritances, bonuses, windfalls, are presented as a Serious Responsibility from tip to toe, the reaction can be the complete opposite, and that's really not what you want.  There is room for a little dreaming.  

[TechWife]

Sorta. A chart would make this easier, but I think A.B,C will help.

 

Person's A named Person B and Person C as equal heirs the estate.

 

Person B died BEFORE Person A, but Person A had never changed the will. My children are Person B's actual heirs, but were not heirs to Person B's will, because everything went to the spouse. Person C was not the executor of Person B's estate.

 

In the little looking online I have done, it looks like you can set up a trust for an adult. The first question is can the executor do that for adults? What about minors? The second question is does it make sense to do this?

 

Is this the timeline? 

 

Person B died, spouse inherited everything person B had. 

 

Person A died, leaving 50% of assets to Person B and 50% to  Person C. 

 

 

I am not sure what you mean when you say that that your children are Person B's actual heirs, but not heirs in the will. Do you mean descendants? Heirs are named in a will, or if there is no will, determined according to the particular state's laws. 

 

The amount due to Person B from Person A's estate is payable to the Estate of Person B. It would then be divided by the executor of Person B's will according to the stipulations in Person B's will. If Person B left 100% of his/her assets to the spouse, then the spouse would get 100% of Person B's 50%. If your children are not named in Person B's will, then they are not entitled to any portion of the inheritance left to Person B by Person A.

 

If, out of the goodness of their heart, the Spouse of Person B wants to give your children the assets, then they can do so, but only after they receive it from Person A's Estate. Person A's assets must pass through the Estate of Person B. It is the responsibility of the Executor of the Estate of Person A to make sure this happens. They cannot do anything other with Person B's 50% than what the will states. The heir, in this case, the Spouse of Person B, can then give your children the money (or whatever it is).  At this point, the age of the child does not matter, because it is a gift from the spouse, not an inheritance. Therefore, the Spouse of Person B can gift that gift in any way they choose. Spouse of Person B can decide to give it as cash, put the money in a trust or give some people cash and put it in a trust for others. The age of the recipients is not relevant because this is a gift, not an inheritance, minors can receive gifts and those who have reached the age of majority can receive gifts. There could be one trust with all of your children names as beneficiaries, to receive the funds at a stated age, or there could be a separate trust for each child, with each child being a separate beneficiary to receive the funds at a stated age. Each trust has to have a Trustee, and it would be up to the Spouse of Person B to decide who the Trustee is. 

 

A different picture would be if Person A named successors for the inheritance. If Person A's will name successor heirs (first to B, then to B's grandchildren if B predeceases A), then the 50% would go to the successor heirs. 

 

If the Estate of Person B has been closed, I believe the Executor can petition to have it reopened. They would then have to establish a bank account in the name of the Estate of Person B to receive the funds (if the Estate of Person B has been closed, the corresponding bank account has been closed). 

 

Now for the disclaimer: I am not a lawyer, nor do I play one on internet forums. This is my understanding based upon my experience as the Executor of an estate. So, really, take it or leave it. 

 

ETA: I see others are saying that Person B does not inherit because they are already deceased, and that makes sense to me. Moreso than what I wrote, above about the money passing through the Estate of Person B. So, ignore me! See, like I said, I'm not a lawyer! 

 

Edited October 5, 2017 by TechWife

[TechWife]

I have a 19 yo. If he came into a fair amount of money, I would tell him we will set up an investment fund for him and the money should be used for "x". When the time for "x" comes, he can have the money. In our case, "x" would probably be a down payment on a house. We would not lie to him about his legal access but nor would we volunteer that info. We'd probably give him 10% or so up front for whatever he wants, and we would deal directly with the executor, while walking our son through what is happening.

 

He almost certainly would go along with this because he is pretty good about money and trusts us financially too. If he insisted on getting it though, we'd give it to him.

 

Except the executor of the estate is legally obligated to advise your son that he is an heir and to pay the money to him. He would be the one who would decide whether or not to set up the investment fund and he would be the one to do it.  Because has reached the age of majority, the executor is only obligated to deal with your son, so in reality, he could inherit money and you might never know. 

[TechWife]

This is basic Decedents Estates stuff, and doesn't vary much between most states because it's based on English estate law which originated in the 12th century.

 

Would this also be the case of The Estate of Person B has not yet been closed? I know that as an executor, I was responsible for collecting all of the money that was due the Estate. 

 

ETA: Is there a difference between money being owed to a person vs. their estate? 

Edited October 5, 2017 by TechWife

[Lanny]

OP If the deceased were residents of a state that you do not live in, I believe that you should contact an Estate Attorney, in the state where they lived and passed away..  Pay for a one hour consultation, for them to read/study the Wills of the deceased, to determine whether or not your DC are heirs.

[Lanny]

Possibly of interest. "What happens if a person named in a will is deceased?"   "Depending on state law and how the will is written, the property will go to either: the residuary beneficiary named in the will. the primary beneficiary's descendants, under your state's “anti-lapse†law, or. the deceased person's heirs under state law, as if there were no will."

[*LC]

It is interesting how posts/responses veer sometimes based on posters' experiences or assumptions. This is why this board is great for seeing lots of different sides of an issue.

 

I know my kids are heirs to the estate of Person A, because the executor, who is also Person C, told me they kids were the heirs of Person A, who is recently deceased. In addition, I have seen the will. However, after reading all the replies I no longer remember what exactly I read in the will and I don't have a copy. I do not think the kids were listed by name. I think it is one of those generic legalese statement that is Person B or Person C die before Person A then his/her share will be bequeathed to his/her children.

 

In this case, this isn't as formal of a process as people are thinking. I am sure the money will come to me even if it is addressed to the children, because the executor doesn't know where the older kids live. The executor has already asked me what household goods, jewelry, silverware, furniture, vehicles, etc, the kids want/can use. Many of these items have already been given to me.

 

 

In the estate your parents handled -- If ALL assets (checking and investment accounts, cars, land and houses, etc.) were already in their name jointly with the deceased then technically the deceased had no estate and there was nothing to probate. That's essentially what happened when my father passed away. Everything he owned of value was jointly held either with my mother, my brother or I. Legally my father died w/o any assets/estate even though he was very comfortably well off. He had made some monetary bequests in his will to other people. My brother and I (the estate executors) were told that we didn't have to honor those bequests because legally there was no money in his estate to pay them. We chose to honor them anyway. Legally we didn't have to but it was what our father had wanted.

 

 

Interesting, I wonder if that might work here. I know that the executor was able to "sell/give" us a car, so I guess it may have been held jointly. That leaves the house & land as the only things that may not have been held jointly. The Executor plans to move into the house after remodeling it. The majority, it not all, of the land goes with the house. It is in a low cost of living area, so the house is worth less than the money in the account. I'm guessing the same for the land.

 

The joint bank accounts are working fine, and the bank knows Person A is deceased.I have received a check from the account written by the executor and a business I am in charge of has written numerous checks to the account, which it has been doing for 14 years to pay off a loan made from Person A (and now deceased spouse) to the business.

 

 

Yes, this.  And the thing you should also remember is that an inheritance of $10-20K involves a different level of discussion than an inheritance of $100s of K.  Low tens of thousands of dollars can be recovered in a person's lifetime.  Hundreds of thousands, much harder to make up.  If a kid blows all of the low tens, that can be a learning experience.  If a kid blows all of hundreds, that is a big mistake, one that encompasses a LOT of missed opportunities for all of one's life--things unforeseen.

 

I'm telling you this NOT to say you should tell your kids to feel free to blow the money.

 

I think there is room in both scenarios for a little bit of kicking up your heels to do something you could NOT have done without the inheritance.  Maybe some travel or a pretty piece of jewelry.  Or some nice stereo speakers.  

 

It seems to me that if bluebirds like inheritances, bonuses, windfalls, are presented as a Serious Responsibility from tip to toe, the reaction can be the complete opposite, and that's really not what you want.  There is room for a little dreaming.

 

Interesting thing to keep in mind.

 

Thanks for all the perspectives.

[livetoread]

Except the executor of the estate is legally obligated to advise your son that he is an heir and to pay the money to him. He would be the one who would decide whether or not to set up the investment fund and he would be the one to do it. Because has reached the age of majority, the executor is only obligated to deal with your son, so in reality, he could inherit money and you might never know.

Yes, I understand that and probably wasn't clear. Parents have no legal say, but they still have say as wise financial advisors to their young adults. I would have no problem heavily utilizing that influence.

[JFSinIL]

While I hope this is not the case, I do think that your kids are not in  line to inherit since the person who had them in their will died first.  Dead folks can not inherit and pass on money. But I am not a lawyer,  just married to one, and from his stories about cases sounds like Common Sense and the Law are ofttimes complete strangers, so who knows WHAT will happen!  Have a local Estate Attorney look at the actual wills (get copies).   And keep us posted!!!

 

 

My two siblings and I were spelled out in Dad's will as sole inheritors of money in and from his various IRAs.  His long-time girlfriend (not wife) is managing to keep half that money - she moved a couple hundred thousand taken as yearly disbursements from his private checking account that we were to inherit  to a joint account a few months before he died. Sigh. 

Edited October 6, 2017 by JFSinIL

[Bootsie]

 

 

In the estate your parents handled -- If ALL assets (checking and investment accounts, cars, land and houses, etc.) were already in their name jointly with the deceased then technically the deceased had no estate and there was nothing to probate. That's essentially what happened when my father passed away. Everything he owned of value was jointly held either with my mother, my brother or I. Legally my father died w/o any assets/estate even though he was very comfortably well off. He had made some monetary bequests in his will to other people. My brother and I (the estate executors) were told that we didn't have to honor those bequests because legally there was no money in his estate to pay them. We chose to honor them anyway. Legally we didn't have to but it was what our father had wanted.

 

 

This is not always the case; it wouldn't be the case in Louisiana.  My parents jointly owned their home, but when my dad died 1/2 of his interest would go to his children.  So my mom would control 3/4 (her 1/2 and 1/2 of my dad's 1/2).  Each child would share equally in in other half (there were 3 of us so we would each get 1/6)  We could renounce our inheritance so my mom could make decisions, but that meant that if two of us renounced and the third did not, the third child would have received all of the children's 1/2 (as long as their our children inheriting my mom would only get 1/2 of my dad's portion)--Louisiana law can be very different from other states, but it does point to the fact that if you move states you will want to check and make sure that you know what will be a legal distribution according to the laws in the state in which you are a resident.

[Pawz4me]

This is not always the case; it wouldn't be the case in Louisiana. My parents jointly owned their home, but when my dad died 1/2 of his interest would go to his children. So my mom would control 3/4 (her 1/2 and 1/2 of my dad's 1/2). Each child would share equally in in other half (there were 3 of us so we would each get 1/6) We could renounce our inheritance so my mom could make decisions, but that meant that if two of us renounced and the third did not, the third child would have received all of the children's 1/2 (as long as their our children inheriting my mom would only get 1/2 of my dad's portion)--Louisiana law can be very different from other states, but it does point to the fact that if you move states you will want to check and make sure that you know what will be a legal distribution according to the laws in the state in which you are a resident.

That’s why I pointed out that state laws vary and that I was referencing how things work “here†(my state). ;)

[Bootsie]

It is interesting how posts/responses veer sometimes based on posters' experiences or assumptions. This is why this board is great for seeing lots of different sides of an issue.

 

I know my kids are heirs to the estate of Person A, because the executor, who is also Person C, told me they kids were the heirs of Person A, who is recently deceased. In addition, I have seen the will. However, after reading all the replies I no longer remember what exactly I read in the will and I don't have a copy. I do not think the kids were listed by name. I think it is one of those generic legalese statement that is Person B or Person C die before Person A then his/her share will be bequeathed to his/her children.

 

In this case, this isn't as formal of a process as people are thinking. I am sure the money will come to me even if it is addressed to the children, because the executor doesn't know where the older kids live. The executor has already asked me what household goods, jewelry, silverware, furniture, vehicles, etc, the kids want/can use. Many of these items have already been given to me.

 

 

 

Interesting, I wonder if that might work here. I know that the executor was able to "sell/give" us a car, so I guess it may have been held jointly. That leaves the house & land as the only things that may not have been held jointly. The Executor plans to move into the house after remodeling it. The majority, it not all, of the land goes with the house. It is in a low cost of living area, so the house is worth less than the money in the account. I'm guessing the same for the land.

 

The joint bank accounts are working fine, and the bank knows Person A is deceased.I have received a check from the account written by the executor and a business I am in charge of has written numerous checks to the account, which it has been doing for 14 years to pay off a loan made from Person A (and now deceased spouse) to the business.

 

 

 

Given the addition wrinkle that you owe money to Person A's estate, I would caution you to be very careful about how this is all handled  There are many moving pieces here, and I hope, since the executor is an accountant, the executor is on top of how everything needs to be handled.  For tax purposes, receiving a gift and receiving an inheritance can be very different--this is at the federal level but could also happen at the state level depending on what state you are in.  It needs to be clear whether money is a gift to you, a gift to a child, an inheritance to you, or an inheritance to a child.  If you have 5 children who were each to inherit $10,000 but instead the money is "given" to you by one person, there will be tax consequences.  

[TechWife]

In this case, this isn't as formal of a process as people are thinking. I am sure the money will come to me even if it is addressed to the children, because the executor doesn't know where the older kids live. The executor has already asked me what household goods, jewelry, silverware, furniture, vehicles, etc, the kids want/can use. Many of these items have already been given to me.

Honestly, if it were the state my mom died in, this would be very wrong. The executor has to locate all of the heirs and should have asked for their contact info. The heirs have to sign papers saying they know they are heirs. Checks have to be made out to the heirs. If your kids want you to receive and hold items for them, the executor should determine that by contacting your kids and getting permission for that. It isn't a matter of formality, it's a matter of legality.

[*LC]

We went through this just recently. My son left quite a large sum of money to my daughter (17 yo) when he died. It went into a custodial account. She cannot touch the money until she is 21 without our permission. she has two accounts -- one her dad is custodian on and one I am. But at the age of 21 she gets all the money. We are in Texas, so the age of 21 is due to state rules. In other states it may be 18. Hope this helps.

 

 

I'm sorry for your loss. It was very cool of your son to think about your daughter when setting up things.

 

An untouchable custodial account till 21 would work fine.

 

 

 

I promise not to be irresponsible with my kids money. I'm sorry that happened to your BIL and DH. I would love to have complete control just in case something is needed before they are old enough to get the money.

 

My 9yo sister's money was sent directly to the court in our state. My dad had to go to court (whichever one handles that stuff) and the money was put into an account that my dad recommended and the judge approved of. That was the extent of my parents' involvement. Until she was 18, if my sister ever wanted any of the money she had to ask the court/judge in writing and then provide receipts for purchases. Once she turned 18 the money was hers without restriction. Some of this is state specific of course, but that's our experience.

 

 

This is my worst case scenario

[Alessandra]

OP, i wanted to suggest that you may be doing yourself and your children a disservice by not being as informed as you could be about your situation.

 

First, it sounds as though you are uncertain as to whether or not your children as beneficiaries. You said you had seen the will, but did not remember all the details (who does?), and did not have a copy. It would be smart of you to get your own copy.

 

Second, it sounds as though you think that getting some household goods and a car means that your children are heirs. It may, but it may not. People who inherit things often give away a lot of stuff that is difficult or time consuming to sell (including cars).

 

Third, one of the most important tasks of an executor is to locate and contact beneficiaries. Not doing that is serious. Beneficiaries are usually notified by certified mail. In the case of a minor, it would be minor's name, followed by c/o parent.

 

Fourth, I am not sure of your timeline, but you said the executor wanted to settle things quickly. Courts, however, often take time.

 

You have received such good advice here. Details may vary by state, but the basic principles are similar in most states.(Louisiana being an exception, French influence.)