Dear Len & Rosie,
I have a 91-year-old mother and five siblings. My oldest brother has borrowed money from my mother on a few occasions and has stated that he has no intention of ever paying her back. There is no documentation on the loans, and as executor of my mother’s will, I need to know how to assure this debt is deducted from his share of the estate. The second issue is that the same brother has a judgment against him for back child support. At the time he went to court for the back child support he put his house and assets in his son from his second wife’s name, so now he shows no assets. I believe he is collecting Social Security as well. If and when our mother passes away, how can I assure that his debt to his ex-wife will be repaid, or will he try to give his share to his second wife’s children?
When your mother passes and you become executor of her will or the successor trustee of her trust, you’ll have to follow the rules. You can’t simply deduct money from your brother’s share just to make it fair. A gift made by a parent to a child doesn’t count as an advancement against that child’s inheritance unless there is good evidence that this was your mother’s intention when she made the gift.
And if it’s been more than two years since your brother said he wouldn’t ever pay back the loans, it’s too late to sue him for a breach of contract. But it’s not too late. If your mother hasn’t lost the ability to make decisions, and if she’s willing, she should see an attorney to update her estate plan and spell out exactly how much money she wants deducted from her oldest son’s share to make up for what she gave him over the years.
Keep in mind that it’s your mother’s choice, not yours. The only definition of what’s fair that applies here is the one in her mind and in her heart. She may be unwilling to reduce her son’s inheritance. Some children just need more help than others. Also, if your mother decides to reduce your brother’s share, she should see the attorney alone, without you being there. Otherwise, you may be accused of undue influence and your mother’s updated estate plan may be invalidated.
As for your brother’s child support arrearage, most wills and trusts include a “spendthrift” clause that prohibits beneficiaries from assigning their interest in the trust or estate to anyone else, either voluntarily or involuntarily. These spendthrift clauses have the effect of protecting a beneficiary’s inheritance from creditor claims.
It seems completely unfair to parents owed child support that a spendthrift clause can prevent them from collecting on a child support claim. Fortunately, the courts agreed and voided spendthrift clauses against child support claims, and the Legislature also enacted California Probate Code section 15305 to cement the deal. As long as your brother’s ex-wife properly files a claim against your mother’s probate estate or trust before the money is distributed to your brother, she’ll get paid first out of his share.
Len & Rosie
We would like to share with you something that we share with each of our trust clients. It’s really important, our clients like it, and we think that your family can benefit from it as well. You may have seen this in the column before. We print it year after year. Consider it as a gentle reminder to get yourself organized. One of the most tedious tasks in administering a trust or an estate is finding the decedent’s estate planning documents and asset information. Frequently, children or even spouses have no idea where their parents or spouse kept these important documents.
After you pass away, the last thing you should want is for your loved ones to have to search through your belongings in a morbid scavenger hunt to find your will, stock certificates, or other important papers. They shouldn’t have to lift up your mattress to look for your safe deposit box key. They shouldn’t have to waste a month waiting for new account statements to come in the mail so they can figure out where you invested your savings.
To avoid these difficulties, you should organize your personal and financial data. This is where the list comes in. Collect the information described in this list and give a copy to your children or close relatives, or keep it somewhere safe and let your family know where to find it. In case something happens to you, the List of Eleven is one of the best ways to ensure that your relatives can find all your vital records.
The List of Eleven Plus One
Plus One. These days, many people receive account statements and pay their bills online, leaving no paper trail at home. It’s important for your loved ones to be able to access your email and online accounts so they can wrap things up when you are gone.
- The name of the bank where you have your safe deposit box, its number, and the location of your key.
- The numbers for all of your insurance policies, health, life, auto, home, burial, etc., and the names and addresses of the agents for each policy.
- A list of your stocks, bonds, mutual funds, and the name and address of your broker.
- The names of the banks or savings and loans for each of your accounts, and the account numbers, or even copies of account statements.
- The location of your cemetery plot or mausoleum niche.
- The location of your will or trust and the name of your attorney.
- Your credit card numbers.
- Your Social Security Number.
- The name and address of your mortgage holder, the account number, and the amount of the outstanding debt.
- The name and address of your accountant, and where your past income tax returns are located.
- The type of memorial or funeral service you want.
If you think this is too hard to do yourself, consider how hard it will be for your children to deal with after you pass away. Take a few minutes to get organized.
Len & Rosie