Inheriting when one sibling is disabled

December 23, 2015 9:22 AM

I am one of 3 kids, and the best off financially. Bob is disabled and on social security and both Bob and Janet have student loans. Our parents are divorced and both retired and Dad just told us all that we will get his house when he dies and that is the case with Mom as well. Everything split 3 ways seems unfair to me since they need it and I don't.

Hopefully it will be a long time until we have to deal with this, but I want to be prepared. I don't have kids, but the other two do. I don't have debt beyond my mortgage. This money would be a luxury for me while it would be a real help to Bob and Janet. The house(s) will be sold once my parents pass because they are not where the three of us live and my main concern is for Bob and how such a windfall would affect his support. This money will not set him up for life, but it could probably pay off his student loans and Janet's as well.
I can opt out of the inheritance and then I assume they would split it. But if that would hurt Bob's social security, then I won't do that. I would be open to buying a place for Bob to live once my house is paid off (he rents right now), but that is an ideal situation. Since this money would help put me closer to that goal, that is what I am currently leaning towards. Again though, I don't want to affect Bob's disability payments too much since I can help him but not support him.
What are my options here? I am open to reading more about this and possibly talking to my parents if there is something they could do in their wills.

posted by anonymous to Work & Money (16 answers total)

If you're planning on just giving your portion of your inheritance to your siblings, don't bother having your parents futz with their wills. It'll be your money to do with as you please, and that includes giving it away. You can give away $14,000 a year to family right now without worrying about it being gift-taxed.
posted by juniperesque at 9:30 AM on December 23, 2015 [25 favorites]

I would hold off on declaring that you won't take the inheritance: You don't know when your parents will pass, and your own situation may be different at that time. While it's good to gather knowledge and know what your options are, I would hold off on making any agreements or signing anything.
posted by Seboshin at 9:30 AM on December 23, 2015 [50 favorites]

Your parents should talk to a lawyer who knows about disability and inheritances. It's possible to set up a special-needs trust for your brother.
posted by The corpse in the library at 9:30 AM on December 23, 2015 [30 favorites]

IANAL, and you want to talk to one, specifically an estate lawyer. With Bob, you are probably looking at a special needs trust. Whether Bob's benefits are affected depends on whether he's getting Social Security Disability, which is not means-tested because it accrues to people who have worked but no longer can, or Supplemental Security Income, which is means-tested. Either way, you want to talk to a lawyer.

If Janet is not disabled or receiving any benefits, her issue is more straighforward, in that she can just receive her inheritance without needing to protect any income.

Talking to an estate lawyer will give everyone peace of mind and help forestall disputes cropping up when your parents do pass on. Inheritance disputes aren't pretty, and can tear families apart, which is why it's important to get an estate lawyer and for your parents to make their wishes crystal clear and in writing.
posted by Rosie M. Banks at 9:31 AM on December 23, 2015 [14 favorites]

Your parents are trying to be fair to all three of you --- and let's face it, there are a ton of people in your position who often are offended when their parents divide their estate based on their children's individual situations. (Some folks feel that an uneven split penalizes the better-off child for being financially stable, for instance, in favor of a child who might have squandered their life and earnings.) It's your parents estate, and their choice to make an equal split: don't hassle them, it's their decision not yours.

You don't say how old your parents are, or what their health/life expectancy is; this really isn't the same concern if they're 50ish & in great shape vs. 80s & failing. Also, Bob's disability: does it effect his life expectancy? Because there's no guarantee that your parents will both die before you or your siblings. Depending on their situation, there might not even be much left in the end for any of you to inherit, if say one or both of your parents need their money for extended and/or catastrophic care. And heck, your own situation could also change: you could lose your job or need catastrophic medical care yourself, all sorts of stuff.

My point being, basically, don't count your chickens before they're hatched. Perhaps work up the framework of a plan, but don't put anything in writing just yet.

Sure, talk to an estate lawyer, but just to make a general plan, not to make any final irrevocable decisions.
posted by easily confused at 10:00 AM on December 23, 2015 [1 favorite]

If you want to help Bob but not affect his taxable income, you could use some of that money to, for example, help his kids pay rent while they're in college, pay for a meal service, or take his family on a much-needed vacation, or buy him some kind of disability device he wouldn't otherwise be able to afford. Or all of these. Or buy people cars, or fund tuition, etc., depending on how much money there actually is.
posted by amtho at 10:11 AM on December 23, 2015 [2 favorites]

What others have said, plus consider people in general are terrible at handling windfalls responsibly. Consider inheriting your portion, then gifting it specifically to pay of student loans or other debt, not just writing a check.
posted by jeffamaphone at 10:22 AM on December 23, 2015 [2 favorites]

Definitely have your parents talk to an Estates lawyer. In some jurisdictions courts will alter the terms of a will if the deceased has dependants, which Bob could be counted as. If they can get everything set now it will cause less trouble when they do pass away.
posted by any portmanteau in a storm at 10:28 AM on December 23, 2015

My family is going through this right now and setting up a trust. Our situations are not identical, but similar. One danger is that the influx of inheritance wealth disrupts the steady flow of government support programs. It appears a trust will help with this as well.

In our situation the 'fair' solution looks like it will be to place the house into a trust and give us both the right to live there if we so choose. This, with recognition that I do not anticipate a desire or need to do so - but it does protect against the possibility of my circumstances changing quickly for the worse and then not being addressed by a new arrangement.

In your case you could likewise look for them to set up a trust to take care of certain known or expected needs of any of you or your siblings equally, while at the same time continuing to structure your life in a way where you don't expect to actually qualify or claim any benefit from the trust while that time comes.

Tldr; ask your parents to talk to a lawyer about this.
posted by meinvt at 10:54 AM on December 23, 2015 [1 favorite]

Don't have your parents change their wills. You never know what troubles will hit you in the coming years. I'm 41 and have been self-supporting all my life until I got hit with a cancer diagnosis five months ago. Now I'm unemployed and living in my parents' spare room. Just because your life has been easier than your siblings so far doesn't mean it will continue to be. You can absolutely continue to plan to give your share to your siblings as needed, but don't preemptively bow out of the inheritance before the time comes.
posted by MsMolly at 10:55 AM on December 23, 2015 [10 favorites]

If brother Bob is so disabled that he's on Social Security he should be able to get his student loans eliminated, one less worry for him and you.

If I were you I would not worry about equitable inheritances unless your parents are very old. You can consider writing a will leaving whatever you might inherit from your folks to your siblings and/or their kids should you die.

You really cannot know how things might change in the future.
posted by mareli at 11:23 AM on December 23, 2015

If you're planning on just giving your portion of your inheritance to your siblings, don't bother having your parents futz with their wills. It'll be your money to do with as you please, and that includes giving it away. You can give away $14,000 a year to family right now without worrying about it being gift-taxed.

You can actually give away much, much more than $14,000 without worrying about gift taxes.
posted by un petit cadeau at 12:28 PM on December 23, 2015 [1 favorite]

Nth don't count chickens, and the only conversation here is to get your parents' assurance that they've worked with a reputable attorney regarding plans for the person with a disability - they don't want to knock him off SSDI when an inheritance is meant as a support. I'm aware of trusts being a support, but they are a lot to manage, and can be pricey to set up.

I recently made it through getting my Dad on medical assistance for long term care. He can get knocked off if his assets go above $2-3000. We are vigilant about his finances because otherwise we cannot afford his care.

Also, this is your SSDI sibling's conversation to have with your parents, presuming they are a functioning adult. Chances are this is being done with prevention in mind, you could ask, what would change for you if a parent died?

Finally, this cannot be emphasized enough, people become disabled in unpredictable ways. It's a club anyone might join, given ~circumstances~. You want to know your siblings and their lives well enough that if you are called upon for help, the giving is easy, and if they can help you, they can connect and provide support in a manner that fortifies the family relationships.
posted by childofTethys at 1:13 PM on December 23, 2015

It may also be the case that your parents want to give you a full share because they know that you will want to look out for your siblings once they are gone, and want to make sure that you have the tools to do so.
posted by 5_13_23_42_69_666 at 5:10 PM on December 23, 2015

Chickens. Hatched.
Those kids they have? Also part of their future security. You don't know if there is any money left when your parents are gone, you don't know how your needs are then or agin in the future. Your inheritance is part of how your parents continue to provide for you after they are gone, don't turn them down. You can always kick in to your sibs needs when the time comes if you wish and can.
posted by Iteki at 6:22 AM on December 24, 2015

We had a similar situation when my father in law died. My wife (who was the executor) has a sister on SSI. She absolutely could not inherit without losing the SSI benefits. I advocated for a special needs trust, but my wife decided not to do that. Her father was well-prepared, and ended up willing half the estate to my wife, with the verbal understanding that half that amount would be for her sister's benefit. There's nothing in the SSI rules about money from relatives being used to improve the life of the beneficiary, it can't be regarded as "income."

Though the trust would have provided more protection (ie, if we'd had a financial setback or some circumstance that attached or drained our assets, the sister's would have been protected), but my wife has been scrupulously fair and trustworthy in how she's handled her sister's portion of the inheritance. It has worked out fine for us, but I still think a trust would be the better way to go.
posted by lhauser at 12:22 PM on December 26, 2015