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My wife and I have bailed out our son, yet we have the daughter-in-law from hell

MarketWatch logo MarketWatch 11/5/2019 Quentin Fottrell

Dear Moneyist:

My wife and I have two sons, both close to 50, both married, only one with children. We are hardworking and have been financially conservative throughout our marriage and have managed to save approximately $1.25 million in liquid assets and $1 million more in real estate equity, though (who knows what will remain when we finally pass?). We will leave our estate 50/50 to both of our children.

The one regret I have in life is not having taught my children about finances. The son without children is financially independent; the other is not.

My son with children is ignorant of his and his wife’s finances and afraid to ask if she is a spender. We have repeatedly bailed them out, having bought several cars, and paid their mortgage when they fell woefully in arrears. We currently give them supplementation income monthly. We’ve also funded 529 plans for all the kids. 

On top of this, the wife is the worst daughter-in-law imaginable (that’s probably a Dear Abby discussion). I resent leaving anything to her. We have also lent them considerable money, but his wife denies now it was a loan.

If it weren’t for the grandchildren, we’d let them sort it out on their own. I’d like to leave half of this son’s inheritance directly to the grandchildren; my wife is not so sure. We can’t have my son be the executor, as we are afraid that his wife will abuse the position.

I love my son and regret the hurt he will have when/if we hire an independent executor for the grandchildren’s inheritance. I am also troubled by having to pay someone a fee. Other alternatives include our other son, who is also financially naive, or a nephew who does understand money. But I don’t want to cause stress or resentment within the family.

What are your thoughts?

Sincerely,

Dazed and Confused

Related video: The right way to cut off your adult children (provided by Money Talks News)

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Dear Dazed:

Trust your gut. Go with an independent executor. An executor has a fiduciary duty to act in your best interests, and is required to produce an inventory of the assets, cash flows, expenses, sales and other matters (such as tax documents). If you can hire a trusted friend or family lawyer, all the better. Preferably, it should be someone without any vested interest.

Check the National Academy of Elder Law Attorneys and the National Association of Estate Planners & Councils for resources. Word of mouth is invaluable: Ask friends and extended family. Avoid any necessity for an 11th-hour paper chase after you’re gone. It will make the process run more smoothly and, given that this is a concern for you, cheaply too.

“Your estate plans should anticipate the unlikely event that spouses pass simultaneously or a surviving spouse does not have mental capacity to handle their affairs,” according to Rocket Lawyer, an online resource for legal advice. “In those circumstances, you need to have an alternate executor, trustee, and/or power of attorney in place.”

You will likely leave your son with resentment if you decide to leave 50% of your estate to his children. A compromise: Leave 50% to your other son, and split the other 50% between your son and his children, while setting up trusts for both sons to help them with their own respective financial challenges. Perhaps a chunk of each estate could be used to pay off their mortgages.

That way, both sons will feel taken care of and no one will be singled out as reckless. Speaking of which, cut the cord with your son and his wife. “I said it was a loan/they said it was gift” is a typical small-claims case on “Judge Judy.” Always get loans in writing. Alternatively, take that loan out of your son’s inheritance. It’s your money. That seems perfectly fair to me.

Ultimately, your work here is done. Your adult children should be quite capable of standing on their own feet by now. As we are approach the holidays, you might also decide to help both your sons with gifts that will pay off in the long term. You could find them a financial adviser, sign them up for workshops in personal finance and/or furnish them with some guides in their stocking fillers.

You have time to make all of these plans based on your children’s personalities and abilities. No one is perfect, of course, but all this early planning will help.

Do you have questions about inheritance, tipping, weddings, family feuds, friends or any tricky issues relating to manners and money? Send them to MarketWatch’s Moneyist and please include the state where you live (no full names will be used). 

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