Trying to avoid the farce after the tragedy.
September 28, 2010 10:13 PM   Subscribe

As the trustee for my parents' estate, what responsibility do I bear if I have ethical questions about how they treat my siblings in their will?

My parents recently changed their will to almost completely leave out two of my four siblings. The reasoning is that their relationships with those two have been strained over several years, and they want to show their appreciation to their other kids. (It is important to note that all grandkids are treated equally, this only affects the kids' generation.)

I understand the "it's their money, they can do what they want" argument, but my parents are reluctant to tell the affected kids about this change, and I'm uncomfortable possessing this knowledge alone, knowing after my parents are gone my siblings will learn I knew of it all along. That feels like a betrayal. On the other hand, I've been doing what I can to reconcile those siblings and my parents, and if anyone tells my sibs they've essentially been disinherited, it would make the problem that much harder.

The irony of the situation is this: less than five years ago my dad's mother died, and her will (which had been kept secret) had several surprises in it. It was my dad's sister who served as trustee then, and she took holy hell for offering the "just doing what mom wanted" excuse for (among other things) essentially disowning two of my dad's siblings. Result of that is now none of them talk to each other. After that ordeal, my parents talked long and hard about the value of transparency, and how it would be simple for us, everything divided equally among the kids and grandkids, and above all, there would be no surprises.

I'm concerned that history is repeating itself and my parents are somehow in denial about their role. I feel like my only option is to step down as trustee unless they are open with all my siblings about the terms of the will. That doesn't make me feel great, but otherwise I feel like I am profiting from my siblings' lack of knowledge, and eventually transferring my parents' conflict with them onto myself. I want to do right by my family here. Have any of you dealt with similar dynamics in your family, and how did you deal with them? YANML, of course.
posted by sapere aude to Human Relations (14 answers total) 1 user marked this as a favorite
Best answer: This falls exactly into my practice area:

1) If you get a greater share than the snubbed siblings be prepared for all manner of accusations and recriminations (including litigation);

2) As trustee you MUST abide by the settlors' expressed intent. You indicate reluctance. That means you are not a suitable trustee. Consider resigning if they won't make their desires public now.

3) recommend that your parents write a "to whom it may concern" letter explaining why they've done what they've done and to only be opened on their deaths.

4) Recommend STRONGLY that your parents tell all the family what they are choosing and why NOW. It will avoid untold fights and problems once they are no longer around to be conversed with.
posted by BrooksCooper at 10:18 PM on September 28, 2010 [15 favorites]

Yeah, BrooksCooper has it. A trustee has to (as much as she legally can) exercise the intent of the trust.

You have a reluctance and a conflict of interest: doing what the trust requires will, you rightly believe, harm your relationship with your siblings and is thus contrary to your interests. Tell them to get a lawyer, one who isn't family or a friend.
posted by orthogonality at 10:34 PM on September 28, 2010 [2 favorites]

I feel like my only option is to step down as trustee unless they are open with all my siblings about the terms of the will.

It's not your only option, but it is an honorable choice. In your situation, it's the choice that I would make. When you lose your parents, you'll need to have the love and support of your siblings. This cloak and dagger nonsense is going to prevent that.

It's your parents choice to allocate assets as they see fit. It's your choice whether you can assist them as trustee. Opt out.
posted by 26.2 at 10:36 PM on September 28, 2010 [1 favorite]

I concur with sapere aude:

You will have a fiduciary duty to follow the terms of the trust, any siblings who are provided for could sue you for not abiding. So unfortunately you won't really have a choice.

IN addition to the four already mentioned you could encourage mom and dad to actually provide for all siblings, if that's what you want.

I suppose there may be a way for the siblings who have been provided for to make a portion go back to the not provided for siblings by executing a partial disclaimer of their portions within 9 months of your parents death.

I am not sure whether that would trigger a probate or if it could be recognized by some fashion by you as trustee. I guess in theory you could execute a partial disclaimer and then petition the court for instructions requesting that you be allowed to leave the disclaimed portions to the not provided for siblings.

Additionally, in many states if all the beneficiaries are in agreement it may be possible to get a court to modify the trust by decree. You should talk to a trusts & estates lawyer licensed in your state.
posted by Twinedog at 10:37 PM on September 28, 2010

Sorry meant I agree with BrooksCooper
posted by Twinedog at 11:04 PM on September 28, 2010

Twinedog is right, to an extent. If your state has adopted the Uniform Trust Code there is a chance to modify a trust if all beneficiaries consent but only to a limited extent.

If the trust says "X and Y get half each and Z gets none" no amount of agreement can modify the trust to give Z a 1/3 share.

X and Y can gift to Z as they see fit but this has gift tax consequences for X and Y which should be discussed with an estate planning lawyer / CPA in their state(s) of residence.

None of which gets around the hurt feelings that Z will have when the trust favors siblings X and Y over him/her.

Be careful with disclaimers. A disclaimer does not allow you to say "I was going to get $dollars but I choose that those $dollars go to my sibling z."
A disclaimer has the legal effect of saying "pretend I died before dear old mum and distribute my share to those who would take if that were true." Depending on the language of the trust / will at issue that may or may not achieve the goal of helping Z to get a share that X and Y deem fair.

There be dragons here. Consult competent counsel before doing things pro se that only lead to me or one of my fellow trial lawyers charging vast sums to fix what you've screwed up.

Logic is not necessarily the lodestar in this area of the law.
posted by BrooksCooper at 11:50 PM on September 28, 2010

There is a contradiction here. Is this a trust or a will?

At any rate, I would ask them not to name you as executor/trustee from the outset, rather than planning to decline when the time comes. With this family dynamic, a corporate trustee (a bank's trust department) is the better choice.
posted by megatherium at 4:30 AM on September 29, 2010

Megatherium has it. Not only should you refuse to be the trustee or executor, the best bet in this case is for a corporate or institutional trustee (like a lawyer or banker). In this particular situation (disinheriting children) there are bound to be massive family issues anyway, and anyone who is trustee or executor will get the brunt of it. Save your family sanity (and lawsuits) by having a lawyer or banker or someone as executor or trustee.
posted by Rosie M. Banks at 5:25 AM on September 29, 2010

Best answer: Nthing BrooksCooper so hard.

I hated it when clients did this. I had one say to me, "What do I care if my children stop speaking to each other? I'll be dead!" And it was so incredibly sad that this is where the family relationship had ended up -- parents caring so little about their adult children that they don't care whether those children maintain cordial relationships after their death.

Which is what your parents are setting you up for -- recriminations, pain, and broken relationships after your parents' death. They are absolutely repeating what already happened once. If you can, point out to them that they're not just punishing the children with whom they have strained relationships, they're punishing YOU. Harshly and permanently, by ensuring your relationships with people you love will be broken. Because of nothing you did. It's just cruel.
posted by Eyebrows McGee at 6:08 AM on September 29, 2010 [4 favorites]

I've seen this sort of thing happen when one generation passes, and the beneficiary generation gets pissed and upset, but then they perpetrate the same kind of crap on their beneficiaries. And have exactly no insight about it.

I agree with those upthread.

It sounds like it would be best to remove yourself as the trustee and get your parents to go with an institutional trustee so that you can remain as neutral party as possible. I would do this even if your parents make their wishes known ahead of time.

Money and inheritance makes people crazy, even if it's "not a lot" of money.
posted by reddot at 6:23 AM on September 29, 2010

Wow, all lawyers chiming in. For once. The advice here is fantastic. Get a professional trustee.
posted by Ironmouth at 6:25 AM on September 29, 2010

Response by poster: Wow. I really appreciate everyone's responses here, thanks so much. It's a relief to know I'm not just suffering from an overactive conscience.

I should be more specific that it is a living trust we're dealing with and not a will, if that makes a difference. Per Twinedog and BrooksCooper above, it specifically states that the two siblings are taken care of via separate (much smaller) arrangements and therefore receive nothing thru the trust, so even if the rest of us agreed, I don't think we could overrule it.
posted by sapere aude at 8:57 AM on September 29, 2010

Couldn't you and the other siblings who receive the inheritance just choose to give, as a gift, shares to the other siblings? I.e., your parents can try to do whatever they like, but you'll all just share things equally.
posted by Paquda at 9:00 AM on September 29, 2010

Agreeing with everyone else- bow out and tell them to get a pro.

They (and you) might want to read a book called Beyond The Grave: The Right Way and Wrong Way of Leaving Money to your Children ( link) which talks about some of these types of estate planning pitfalls and some possible solutions. I found it very readable and very useful.
posted by small_ruminant at 12:20 PM on September 29, 2010

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