Leaving an inheritance to a spending addict; will this work?

[Newblackdress]

It's a 45 year old DD who has been overspending all her life, running up huge debts and constantly appealing to family members to bail her out. She has a good job and earns well but is absolutely irresponsible and not always honest.

Her dad doesn't want to leave her out of his will or to leave more than half his estate to DD's brother in case of bad feeling between them. But doesn't want the money he leaves DD to be instantly disposed of leaving DD middle aged and with nothing but debts.
He'd like to leave a small lump sum to DD without strings and allocate the rest of her share to clear some or all of her debts. The deal would be that DD would present the paperwork to the executors with authorisation to pay them off, and the executors would do so until the money ran out.
If the debts amounted to less than the legacy (unlikely), the remaining money would go to charity. This is to avoid DD claiming that all her debts were paid off in order to get the remaining money (she has form for similar deceptions). And if she isn't willing to make the small effort it would take to present the paperwork in say 3 months, the whole amount would go to charity.
Has anyone tried anything like this?
And can anyone spot a major flaw?

i have no idea of the legalities, you would need a solicitor for that.
But it seems wrong to me to put conditions on how she spends the money, If he really believes she cannot be trusted then you need to have a conversation with her and explain what you are planning so it isn’t a shock.

I don’t think you can dictate what someone does money you leave them.

Spend some of this money helping her with counselling now.

No I don't think this would work.

Does she have children?

I am sure it would be possible to have it doled out as a living allowance, say 10k a year or so until it is all exhausted.

Isn't that how some trust funds work ?

It seems a bit weird how on one hand he doesn't want her middle aged and with no money, but on the other is prepared to give money away to charity to stop her getting her hands on it.

Ask a solicitor about a trust fund for her that comes into place at your death and ensure the trustees are people not easily manipulated.
( Had to do this as the executor for my parents will for younger brother as he had a black hole of debt and a bad taste for illegal drugs and booze. trustees I appointed were the solicitors firm)

A relative put money in trust and put solicitor in charge. Not sure how they tied it up but solicitor pays household expenses and maintenance. They get an allowance

Ignore the its not fair brigade

Get a solicitor and get a trust in place.
I would do monthly allowance not annual this will ensure she is comfortable into pension years (presumably she has close to zero private pension)

at 45 she's middle aged now!

No, no children, and unlikely to have.

I agree, but this wouldn't be exactly 'leaving' her the money. It would be allocating it to pay her debts, and if not used for that, would default to a charity.

A Trust paying monthly might work, but I heard that the cost of setting up and running a Trust took a heft proportion of the value. Also we're afraid that she would borrow against future payments. Using money to directly pay off some debts would at least free her up a bit.

As others have mentioned it sounds like you’re after a trust.

Now I’m going to be very blunt here. Before spending money and effort to set this up, think to yourself is it worth it.

At the end of the day let’s imagine you set up a trust for £50,000 with stipulations that it is used to pay debts. DD dutifully pays off the debts. Now what… she likely just runs up new debt. she’s no better off and you’ve given her the means to go out and spend.

I think you/DH need to figure out if you want to will her the money at all. As you said DH doesn’t want to give her less than her sibling. My advice is to just give it to her and not think about what she does with it. Sad to say you/DH is not going to be around to care.

I'd think this was possible, but difficult to implement and actually has a fundamental flaw - if she sorts herself out and has no debt, she stands to inherit nothing, while her brother gets half the estate.
If you really want to restrict, I'd look in to a trust or setting up a pension (in trust) for her.

Edited to fix the ever unhelpful autocorrect monster!

Thanks, that's interesting, perhaps we could do something like that.

Sadly you could be right.
She seems determined not to even attempt to manage her money.
We hate to think of her getting older and older with no parents to help her at the point when the shit seriously hits the fan, which it will at some point.

That's a thought. Did it work; did it help your relative at least cover his basic needs?

You say she has been overspending all her life. You need to stop bailing her out now.

What on earth is the point of paying off her debts?

She will just go out and get more debt.

It's not really to stop her getting her hands on it. He wants her to have the money.
It's to stop her either blowing the whole lot in a few months, or pretending she has paid back debts that she hasn't paid off in order to get some ready cash.

Well, yes.
Oh God! It might be hopeless. Unless a Trust would work.

This a horrible thing to do to an adult unless they have incapacity and will be a nasty shock to her. Perhaps you should discuss your plans with her and see if you can work something out together if you really can’t leave her a lump sum.

He has stopped, thank God. Unfortunately her mum is continuing so she never really has to face the consequences. But she will have to when both her parents are dead. Her other relatives are fed up with her and she isn't great at forming lasting relationships.

If you just do a trust that releases a certain amount per month. That way she can't spend it all at once.

But you can't try and tell her she must spend it on debts. She's always going to be in debt regardless because that's how she's been all her life. She won't become financially responsible just because you paid her debts. Either now or in death.