My sister passed and I am tasked to distribute her savings to her two adult siblings. The funds are in my name - I took them over when her dementia got worse. The daughter has a gambling problem - I gave her $5000 and she spent it all in less than a week despite rent, utilities, etc., coming up. She's 46, never had a job in her life, and completely irresponsible.
I am sure my sister's wishes were to give the kids the money but I morally cannot just let the daughter crash and burn. Yes, legally the money is hers.
Is there some sort of 'trust' that could dole out the money? I don't want to micro-manage her world but I cannot ethically let her lose it all overnight.
Suggestions appreciated.
You want to get that dealt with so you are not out the taxes because you gave the money away according to her wishes.
If it was put in your name, you need to ensure this is taken care of.
Seek legal advise from an Estate Attorney, this will save you the added expense of a CPA.
If the money is yours & there is not enough money to set up a trust, you can put the money into a Money Market Acct with her name on it. There are MM accts that a person can only withdraw the money out 2 to 3 times a year and only a given amount, plus MM acct has better interest rates, she would get a small dividends every quarter, or you can have the dividends rolled back into the acct. Another idea is to put the money in a CD acct which the interest rate is not that good, she would also get a dividend every quarter, but the dividends can be rolled back into the CD as well. She can't touch it for 1,3, 5, years however you set it up for. Both these accts are cheap and easy to set up at a local bank or credit union. And there is your poof that you did not take or use the money for yourself. Just an idea.
I can appreciate your wanting to protect your niece from her addiction and the law may be on your side IF you handle things properly. The thing about taking action that might make perfect “moral” sense is that it doesn’t always protect you from legal ramifications.
unless your sister left enough to make a significant difference in her daughters future then you may just be going through an exercise. And what about the other siblings funds?
I know this is a tough spot you have found yourself in. Come back and let us know how you work it out. We learn from one another.
If the money is legally hers, I don't know how you can keep it without her permission. However, if it is legally yours and you are giving it to her because that's the right thing to do, you will have more options. There are trusts that can be used called spendthrift trusts. Or, if there isn't enough money to justify the expense of setting up a trust, you can offer to pay her rent until her portion of the money runs out. At least then she'd have a place to live.
A consultation with a lawyer would be your best move here.