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?

It would be a terrible waste. She would just run up new debts.
Basically the shit needs to hit the fan, sooner rather than later. Don't bail her out at all. See what happens. She needs therapy.

I know someone who had a trust built with a monthly payment as suggested above. When the person in question died, they trust was split and the two kids received it lump sum. Any costs would be better than setting the money in for and having it run out.

The only way you can stop her blowing the money is by not giving it to her.

What you can do is limit the rate at which she can blow it, maybe in the hope that some day she will learn responsibility before it all runs out (at the age of 45 this is unlikely).

Solicitors are the best people to ask for the technical details.

I would agree with you but honestly we or rather he (my DH, her dad), has tried and tried for years to help her budget and understand how money works. Her mum has paid for years of therapy for her but she doesn't make good use of it. She gets money from both her parents by lying to them and even threatening suicide. It's a horrible situation.

She's a grown up middle aged woman.
I think you need to accept that she is responsible for herself, her finances & her own decisions. You can jump though all the hoops you like, but this won't change.

I think you are being realistic in seeing that she won't change, but trying to control her finances from beyond the grave is foolish & IMO pointless.

Why not just accept she is who she is and leave her to it?

Generally speaking you can't put conditions on a bequest (although worth asking a solicitor if there is a way round this). A discretionary trust might work but, unless it's a very large sum, the hassle and expense- and additional tax- probably make that a bit pointless.

She is an adult woman, you can't control her spending now and you certainly can't do it from beyond the grave. So either just leave her the money or leave it to someone else.

Have you ever asked her why she's like this? Has she had therapy?

I don't really think it's ok to try to control the way adults live, it's not going to be an easy message to receive if you leave half to her brother without strings and half to her with rules from beyond the grave.

Has she never been declared bankrupt? This is really what needs to happen for the cycle to end.

Can DH talk to her Mum about stopping helping her so that she does go bankrupt.

There is no point paying off her debts or even a monthly allowance that will just service debts.

Everyone, including credit companies of any type need to stop lending her money.

Has she gone to CAP or similar?

I’m coming at this with some experience… My sister is the train wreck in my case. (She was a functioning alcoholic until my mum got sick then proceeded into the unfunctioning variety)

Here’s what happened. My mum left a 50% split of her assets between my sister and me. Sadly she appointed my sister as her executor 🤷‍♀️ She wanted my sister to feel included. (I promise I’ll keep this brief)

Anyway after my sister proceeds to take everything not nailed down and she finally manages to sell the house. Let’s just say for 300K. That was in Dec. Now we’re in June and and My sister has not released my portion of the funds (130K was what she said she’d send 🤔) and has had her house up on a public auction site (this happens when the bank forecloses for non-payment).

She hasn’t worked in 5 years. I’m in the US, so there isn’t anything like UC or any long term benefits that are easy to get. So I’m pretty sure she’s spent my portion which is why she ignored my text in Feb and May.

She’s likely used her portion to enable her to drink and she’s now living off of my portion. She’s unemployable in her profession and area already getting fired from the big companies headquartered there.

If she’s spent my portion (I mean hey maybe she’ll surprise me 🤪) I am more than happy to involve the probate court and police. And she’s a 55 yo woman who has never taken care of herself.

All of the above I told my mum would happen in a blunt conversation when we were discussing her final wishes.

Back to your situation
DD may suddenly find an epiphany and get control of her spending. That would be great. But I’d just approach the will as she’s just not going to change and either accept it or give the money to someone else.

it sounds like an addiction has she had counselling or spoken to her GP

Bear in mind I was up against a triple nine intellect that had no common sense.

It did for a couple of years and he hated both it and me for instigating it. When the head of chambers in charge of the trust went away for a couple of weeks R&R he managed to play two trust fund solicitors, who were trustees, against each other to access the main fund and blazed through £300k in three days till the head of chambers came back from holiday and stepped in to prevent him from also remortgaging the trust house he had to live in. At that point I was so glad I had had the common sense to refuse to act as a trustee or handle his affairs.

the £300k binge on drugs and booze finished what brain cells he had left and the head of chambers had him assessed and declared as lacking mental capacity. he died soon after and I left the legal firm to deal with the mess of debts he ran up.

The trust would have worked if his intellect had not been in the very top o.1% of the population. His years of using illegal drugs and booze racked it down to MENSA level merely fiendish and he used that to manipulate and convince the other trustees he could be trusted to manage his own affairs…….I tried.

It is worth speaking to a legal500 solicitors if you have complications such as a child in capable of using money wisely and what legal safeguards could be put in place so they have benefit of trustees managing funds but not direct access to money to run amok with.

I will say that I think in my sister’s case a trust with a set amount paid monthly would have been best and it would have worked. it would have limited the damage and would have given time before the crash and burn.

At the end I know my mum was hoping/expecting I’d step in to bail her out as my mum always did. I told her I wouldn’t and couldn’t if she was executor.

My mum knew it it would be a shitshow but I think she was tired of it all. On that front I don’t blame or think bad of her because of it.

Christ… we should start a club or something.

We do ask her, yes. She either says that that's just how she is; a bit ditzy and impractical, or claims that there is some unexpected expense, not her fault, that has pushed her over that month. Totally ungrounded.
We don't mind her receiving a hard-to-hear message; she needs to grasp that her behaviour is causing huge grief to people who love her, and that her parents don't trust her because the way she behaves isn't trustworthy. And also that they still love her.

Her dad has encouraged DD to go bankrupt but she doesn't want to because it would make her look like a failure and she's sure she can deal with this problem given time. We're talking about at least 70K of debt, probably more.
And he asks his ex not to sub her, but his ex is terrified that she'll end up homeless or even suicidal if she can't keep up her lifestyle so she keeps on guaranteeing her rent and giving her money month by month.
DD has got an IVA through which she pays off a small amount of her main debts each month, and can no longer get credit from a bank. But she can use Kama and other informal lenders, and borrows from friends and persuades her hairdresser etc to give her credit. We fear she may also be using loan sharks though she hasn't admitted that.
The main problem is that she won't recognise that she needs to spends less money in order to get out of debt. And she believes her parents have a duty to keep rescuing her.

I do think sometimes this sort of stuff constitutes some sort of desperate attempt at "parenting from beyond the grave", often because parenting while alive was too hard or it was too difficult to actually take the tough decisions necessary during life to educate the child in how to be a responsible adult.

I do understand there are some children that are impossible to parent. But at least at that point at the very minimum you can not be an enabler to their behaviour.

I don't think in this case it's the daughter that needs the counselling.

Because while the way she behaves works for her, her behaviour isn't going to change and is actually quite understandable.

Gosh, that is terrible for you. And the last thing your poor mum would have wanted.

Yes, both. Lots of therapy, paid for by her parents.

Another terrible story. What a nightmare.
I don't think DD in our case would even think of consulting a solicitor so something like that might possibly work better for her.

Leave nothing, unless you think DS (DD's brother) will be bled dry if you did. From what you say there is not a specific debt that could be paid and nothing else.

The money that might have gone to her were it not for her spending addiction could go to charity, or more distant family members.

You might be right.
DS's wife is very determined that he/they will not take over DD after her parents have died. But he would find the pressure from DD very hard to bear even whilst agreeing with his wife.
I like the idea of the money going to a charity that would support people with addictions.

Paying the debts to give her a clean slate won't help as she'll just rack up more

I'd suggest - (1) trust, whereby she received a regular allowance or (2) accept this is how she is, how she'll continue and accept that when she's spent her share of the inheritance, it's gone

I'd say this is a time when it's worth the ongoing expense of a trust.

If she doesn't get any she's likely to make her siblings experience unbearable.

And I think leaving a child out of a legacy has huge emotional repercussions for them

Honestly, I think your DH should either just go ahead and leave her the money, or make a command decision not to leave her a penny and live with it. The outcome will be exactly the same either way. He cannot save his DD from herself, and she is not going to turn into a prudent, financially continent person, ever. She doesn't believe she has a problem and she is probably too old to change in any fundamental way now.

Either he leaves her the money for the sake of fairness and accepts that it gets pissed up a tree, or he puts it somewhere it can be useful - with her DBro, or a charity.

This will only work if she doesn’t know about it in advance, or she’ll see it as a reason to run up debts to the value of half the estate. It’s just bringing forwards the reckless spending (with no guarantee that she won’t just do the same again with no bail out).