Expert: Timmy Chou - 6/3/2008

Question
Dear Mr. Chou,
I have been married to my 2nd husband for 15 years.  During that time, our house gained much equity and we have a small amount of savings in the bank.  Having not worked for much of this time, my husband has been a wonderful provider and loving mate.

I have a daughter from a previous marriage, she is 40 years old.  Last year, after I was diagnosed with a brain tumor, she was insistant about knowing what was in our will.  Might I add that my daughter is quite comfortable financially.

It was explained to her that if I should pass first, which was a possibility and still is, the amount of the estate I acquired with my husband would go to him.  My daughter became enraged and demanded that the house be sold and half be given to her as her 'rightful estate', my half.

For six months this issue has all but ended our relationship.  There is such resentment about my leaving the assets to my husband that our grandchildren are now being kept from us for the most part.  Even visits to see how my health was after having the double brain operation were stopped.

I would also like to add that my husband has a will and if he passed first, all would go to me.  

We live in NY and I do not believe you are nearby, but would like your insights to this situation.  I am heartbroken, so is my husband and my daughter (in her own way) is experiencing much grief about a will that 'does not protect her'.

Any words of wisdom would be a blessing to my husband and I.  We fear the will will be probated after my death and I do not want my husband involved in such a situation.  Yet, on the other hand, I wonder if my daughter has a legitimate point.

Lynn

Answer
Thank you for your question!

As I always mention to questioners, mediators act as neutral third parties to disputes and never "get involved" in judging the merits of conflict, but merely use special techniques to help the parties decide how to negotiate their own settlement.

The case you describe here is very typical and can be considered a "classic" family dispute presentation.  I cannot mediate this with you alone, nor am I an attorney and cannot comment on the "merits" or legal aspects of a particular position, however I can respond to your question from my consulting and mediation experience.

Note that this issue may have legal ramifications and you may wish to consult an attorney.

First my heartfelt sympathies to you for your hurt, after all this time it must be painful to have your relationship with your daughter come down to money.  I hope she is able to enlarge her thinking and feeling abilities, and wake up.  I do see cases where this happens.  

Let me make several points.  First, (I assume you do not have other children with your 2nd husband, nor have you mentioned any of his children) I assume that you have considered the entire matter of your total estate with your 2nd husband and that you have an idea where it will all go at the end of the day.  This means that in no way does your daughter get nothing.  However, as complete control of the assets will pass to the survivor spouse, sometimes things can change.  Sometimes the survivor marries again or starts a business and invests all the assets in the business -- lots of things can change.  Sometimes people are involuntarily disinherited.

Secondly, where there are reconstituted families and competing inheritance claims, I would suggest strongly that a will is not adequate protection for you.  You need a revocable trust that can function as you direct after you are gone and protect assets for you.  The most important reason is that if you merely have a will and your assets are of any size at all, they will have to go into probate court in many states.  Then the state may decide in probate court a division no matter what your will specifies -- not to mention the cost involved.  Also, angry claimants can bring suit in probate if they believe they are entitled to a piece of the pie.  Please consider a trust as it will box out probate.  I can give you a referral if you wish.

Third, your money belongs to you.  You earned it and it is yours to use as you see fit.  No child should be thinking that your assets somehow "belong" to them.  I would be pointing this out to them and wondering aloud why anyone should feel good about giving such a majestic gift to envious and ungrateful brats.  There are certainly millions of needy, deserving people who would treat any monetary gift as a sacred trust, and be full of gratitude and resolve to "pay it forward".  We all wish to leave a monetary legacy to our children, but no child should ever feel like they "deserve" it.  They don't.  They deserved to be raised and cared for and financed and prepared to be responsible adults--all of which you have done.  Anything beyond this is a gift, pure and simple.  

So with these ideas in mind here is what I would recommend.  First, you should sit down with your husband and do the math.  Figure out who should get what.  If your daughter is completely wacko, consider giving her "share" to your grandchildren.  Examine the scenarios if you should go first or if your husband should go first.  Make some decisions.  These can be changed if you want later, but you should start somewhere.    

You can use some metrics to slice the pie with if you want.  For instance start with the assets you each brought to the marriage.  These assets you may wish to identify and mark for transfer.  Your other jointly acquired assets are another matter and you can think about a division with these.  Finally, you should agree that your assets together are to be used first and foremost for your own maintenance and living expenses.  You each may need medical care or living assistance care or whatever.  No one can see the future and no child should be thinking that a parent is "using my share" to meet her own living expense needs.  This should also be made clear to the child, and the child should consider themselves lucky if they are not having to financially supplement the care of an aging parent--a much more common occurrence.

Once you have some boundaries identified you should draw up a living revocable trust. You can announce to the family at large of your decisions and let them deal with it, but at least you have identified your priorities and your reasons for why you are making these decisions, but be sure to make clear to all comers that this is your money and if you want to send the entire amount to the Salvation Army or blow it in Las Vegas you will do so.  

You can thank your daughter that this crisis has prompted you to re-examine your estate matters and hope she will understand why you have done the things you have done.  You DO wish to avoid probate and a trust will accomplish that.  You DO wish to be sure she is not disinherited and the trust will accomplish that as well.  You DO wish to bequeath specific items to her as well and the trust will accomplish this too, and you DO wish to leave your portion of your estate for the care and maintenance of your husband, but not to be used to give to some new spouse's children or whatever and the trust will also accomplish this. But your money has the following priorities: 1) care and maintenance of your joint lifestyle; 2) care and maintenance of the survivor's lifestyle; and finally, 3) distribution to specified heirs.

This dispute is a good one if you wish to engage a mediator, but just remember that a mediator will only help you resolve your own matter and not come to your defense.  

These are some ideas.  Feel free to follow up with additional questions.

For your information, the pros and cons of the types of dispute resolution methods follows.

GOOD LUCK!

Arbitration, Mediation, and Litigation

Arbitration: the referral of a dispute to one or more impartial persons for final and binding determination outside of the judicial system

Benefits of Arbitration:

    Confidential, no public record
    Limited exchange of documentation, information
    Quick, don't have to wait for a court date
    Arbitrators have expertise in the subject matter and are trained in conflict resolution
    Cheaper than litigation
    Preserves business relationships

Negatives of Arbitration

    It's a compromise, no 0 winner
    Complex arbitration can be costly
    If not satisfied, may litigate the arbitration procedure
    Poor results with an unskilled arbitrator
    Both parties must agree to cooperate in the process

Mediation: the process by which parties submit their dispute to a neutral third party (the mediator) who works with the parties to reach a settlement of their dispute.

Benefits of Mediation:

    Neutral mediator can objectively suggest alternatives not considered before

    Parties are directly engaged in negotiating the settlement
    Can be quicker than litigation
    Less costly than litigation
    Preserves business relationships
    85 of American Arbitration Association cases mediated find successful solutions

Negatives of Mediation

    may not reach a binding decision
    unskilled mediator

Litigation: using the judicial system to resolve disputes

Benefits of litigation:

    a clear winner and loser
    uses a prescribed set of procedures
    more predictable outcomes
    is final

Negatives of Litigation:

    waiting for court dates can do more harm
    usually more expensive than mediation and arbitration
    part of the public record