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 would just do a trust and a monthly allowance.

An uncle set this up for his difficult son. He had hoped that either my husband or BIL would
serve as executors. Both declined and it is now handled by a solicitor who specializes in the task. I don’t believe it is that expensive as it is a pretty turnkey operation. It’s not the kind of situation where he submits every coffee receipt for reimbursement. He just gets a deposit every month and has to live within his means.

If we went ahead with the original plan then we wouldn't tell her in advance. But I don't think that we will go ahead - too much against it sadly. As PP say, you can't save people from themselves.

She’s already middle aged and full of debt. It sounds as though she needs help. Why have people enabled this for so long? A letter from her father might not go amiss, explaining his dilemma and make her think. Does she own her own home, have pension provision, support from her husband?

Far better is to set up a trust with the remaining money that pays an annual dividend over 20 years or so

I think this is wildly unfair and controlling.
However it would be simpler to put her share of the inheritance into a trust manged by trusted people then dictate that it is solely for living expenses with an allowance for self directed expenditure (depending on how much the inheritance is likely to be)

Either a trust with a monthly income or half and half between brother and sister and walk away from it.

If no trust I wouldn't worry, the parent will have done his bit and treated both equally. Which is what he wants.

I'd be inclined to just leave it 50/50 in the knowledge that even with a trust fund she will continue as she is. As an adult there is not much can be done about that from the grave really.

@Newblackdress It’s utterly controlling! DH doesn’t approve so he will control her from the grave. It’s rather nasty. Best to let her make her own mistakes. Treat her the same as her brother or you risk upsetting their relationship.

Controlling? Nasty? Give the man a break. He knows he’s been complicit in the past but he has stopped giving her money now and is looking for some way to help his DD even a tiny bit when he’s no longer here.

If her parents have bailed her out numerous times then how is this squared with your DHs DS? We have always taken pains to treat our DDs the same although luckily they manage their money well and don’t have debt. If DD has already had a large portion of the inheritance surely DS should get a bigger share?

I think your DH should just accept she wont change if she has had therapy previously and resign himself to not controlling what she does with the money after his death or give the money to DS with the excuse she has already had numerous bailouts and maybe a nominal sum going to her. He needs to write a letter explaining though,

That's a good point. In fact DS has had a sizeable amount of money as a flat deposit, while DD has never come close to buying a flat, so that needs putting into the balance too; also some help DH gave him when his business was in trouble.

But spending her inheritance badly won't hurt anyone but her, and certainly not the deceased.

It's not healthy really to want to send this type of message from beyond the grave.

She hurts her parents by not taking care of herself. It's agony for them. True that they won't notice once they are dead.

What's being proposed feels unhealthy.

She'll be bereaved and be sent a 'message'. That's potentially very damaging.

I think your DH could use some emotional support to deal with his feelings about this in a better way. Her failure to care for herself is terribly sad but maybe not trying to control it would give her space to take control herself.

Good luck.

Could your dh insist it goes into her pension fund instead so she has something to live on when she's older? That way she's likely to have xx amount per month.

Give the money to charity - or spend it all. There will be no money to fight over.

That's a great idea if it is possible.

Many people set up Trusts - its not nice to be on the other end of, but may be a good idea here.

Would her "share" be enough for a small flat which could be owned by a trust managed by her brother & solicitor initially, then just the solicitor ? She could be given an interest for life in the property, but then on her death it is sold with proceeds given to a nominated charity? As she doesn't own it, she can't borrow against it, and if she doesn't want to live in she can let it and have a modest steady income from the rent.

How much money are we talking?

if it’s enough to be meaningful over a long time a trust is the way, or a pension.

However if you do this you should think about treating both children the same and that might be hard for her brother.

If not a significant sum it’s really the same whether you give it to her (she’ll spend it but not go into further debt) or pay the debts (they’ll be paid but she’ll be creating new ones).

I have an acquaintance like this who has gone through serious money, thinking it would never run out, until it did. It’s not pretty and I understand the worry as it’s turning out very very sadly for the person I know. So, if you can try to find a way for her to have some kind of steady income in later life I would. Maybe she’ll learn to budget, or not, but at least there’s a chance.

@Newblackdress It’s control. Whether you like it or not, he doesn’t approve and he wants to control from the grave. He’s now apparently favoured DS already. Probably spending DD knows where she stands in the family!

Agree. I have a relatively like this, which keeps being bailed out only to run up more debt again. It's an endless cycle and such a huge waste of money.

@WeCouldDoBetter What does it matter if you are dead? Is this woman actually loved? It sounds like she’s resented and a total annoyance. When you are dead, let it go!

FWIW @Newblackdress this does seem like a situation where a trust with a solicitor as a trustee might work for her share of the inheritance. Yes it will cost money but possibly less than she would spend given free access. And in time it will be for her DB to stand up for himself. I don't see this as controlling I see it as trying to do the best for her. I think better than leaving her nothing

You are so wrong. It’s not a question of disapproving but of being frantic with worry that his beloved daughter will end up destitute.

But it's blown either way whether you leave it to her to spend in the future or to pay back a bank I.e. she still has the holiday/new jeans/crap.

Either way you're facilitating her.

Personally I wouldn't want my money going to a bank and I'd behaving an upfront conversation about how her money management means no inheritance. It doesn't mean you don't love her, just that you don't value money in the same way.

As for eat you do with her share..? Charity or brother. Does she even have a relationship with her sibling?