A few months ago, my father dropped a bomb on me: He informed me that he had named me as his executrix and that I would inherit everything once he passes. (I hope this is at least another 30 years from now as he’s in his mid-50s.) I was shocked, to be honest. I have two younger sisters, but due to a history of hostility and animosity between them, they have been estranged for close to a decade. In addition, my sisters decided to change their last name from his to our mother’s maiden name shortly after our parents divorced after 25 years of marriage.
Short of a complete reconciliation between him and my sisters, his mind will not change. How do I divide his estate equally between us once he passes?
Even considering all this, I had assumed that my father would have divided his estate equally between the three of us. This puts me in the uncomfortable position of knowing his plans for his estate and disagreeing with them. I have not told my sisters of our conversation. Although there is time for him to change his mind, my dad is a stubborn man. Short of a complete reconciliation between him and my sisters, his mind will not change. How do I divide his estate equally between us once he passes?
My father has a couple pensions, a 401(k), some savings, stocks and bonds, in addition to a small piece of property, so I’m going to conservatively ballpark it around $150,000. He’s the kind of man who has a little something stashed away, well, everywhere. I have not expressed my opinion to my father — this is his money to do as he sees fit — but this flies in the face of my morals and ethics. How do I carry out his wishes and make sure my sisters receive their fair share of his estate?
Future Executrix Wanting to do the Right Thing
Your story brings to mind another man with three daughters: King Lear. “As full of grief as age; wretched in both/If it be you that stirs these daughters’ hearts/Against their father, fool me not so much,” he said. (That was from Act 2, Scene 4, and I did not remember that from high school, I had to look that up). King Lear had a lot of resentments too, but he made the mistake of giving away his fortune while he was alive. The late Sherwin Nuland, who wrote the influential book, “How We Die,” learned a lot about living from treating the dying. I have quoted him before, but it never gets old. “Getting old is hard and dying ain’t pretty,” he told NPR. “What gives dignity to death is the dignity of the life that preceded it.” This may (or may not) work as an argument to change your father’s mind.
By taking their mother’s maiden name and breaking off contact with your father they have effectively already disinherited themselves.
If you don’t succeed, you have several options. No. 1: Heirs typically have nine months to “disclaim” inheritance or part of their inheritance in writing, which can help you avoid gift tax (if you were to give your siblings money), but it’s fraught with difficulty. You would need to check that your sisters are not explicitly excluded in your father’s will. It’s also unlikely to work if you have children, as they would likely be next in line to receive your father’s inheritance. You receive your father’s inheritance and, after that, it’s your money to do with it what you wish. If you believe that your siblings each deserve a one-third share then you should follow your instinct.
No. 2 option: Based upon the relatively modest $150,000 in assets and federal gift tax laws, you could likely give your sisters their share of the inheritance without a gift or estate tax, unless your own assets plus any taxable gifts you make during your lifetime are over the current estate and gift tax exclusion amount of $5,450,000, adjusted for inflation, according to Michael Howell, an estate planning attorney in Hilton Head Island, S.C. There is also the annual gift tax exclusion amount of $14,000 per sister (or $28,000 if you are married and do so with the agreement of your husband).
Onto No. 3: You could ask your sisters to sue you for their share of your father’s money. But this could be costly so you would need to find a lawyer who could do this cheaply, perhaps a friend. It must also be a legitimate lawsuit. The most common reason for such a suit is undue influence on the parent by the child, Howell says. “The parent is usually much older than 50 or suffers from some infirmity like severe alcohol or drug abuse, which makes the parent more susceptible to undue influence,” he says. (Side note: You also need to ensure that you are the beneficiary on your father’s life insurance, 401(k)s, IRAs as they are regarded as non-probate, meaning it’s not part of a person’s estate.)
And No. 4: If your sisters were mentioned in the will and left some kind of token gift, a avenue may open for you. There is a “private agreement among successors” option where those named in the will to receive property of a decedent can agree among themselves to alter the amounts. “This could even apply if your father gave your sisters a nominal amount and did not make it clear that he was intentionally disinheriting them,” Howell says. “If they are shown to be intentionally disinherited, then this procedure would not likely work because for the statute to apply, they have to receive assets of the decedent under the will. “
Let me get all Shakespearean on you again. Alas, poor Executrix, I could count on one hand, maybe even with one index finger, the amount of times I have received a letter from a person who wants to share their inheritance. I have heard stories of a sister who wanted to cheat her siblings out of their inheritance and another raging against the smallest of perceived inequities in a parent’s generosity. People typically require the services of the Moneyologist because they believe they have not got what they think life owes them, not because they have received (or are expected to receive) too much.
I have one final thought. Your sisters changed their names 25 years ago, making a symbolic break with your father. By taking their mother’s maiden name and breaking off contact with your father they have effectively already disinherited themselves. And this is your father’s money do with as he sees fit. King Lear wasn’t a good judge of character — Cordelia was the good egg and just couldn’t stand his nonsense — but he was free to do what he liked with his own money. Your father’s decision is also his to make and, given his long estrangement from your sisters, it’s not an unreasonable or unexpected decision. You could take them on a trip of a lifetime, or help pay for their children’s education. There is a lot you can do to spread the wealth.
Your two sisters may have been done wrong by him during his lifetime and, if that is the case, I do applaud you for doing what you believe is the right thing to do.
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