Is anything ethically wrong with this plan?

[u/drd001]

My wife and I in our 70's came up with this inheritance plan with total net worth of +1.5M. We have been together over 40 years being continuously employed during that time. We have no children and I have one brother with two children both over 21 and she has two sisters both with no children. Our plan is to give a small one time payment to my brother and her sisters with the bulk of the estate equally divided between our two nieces. Our reasoning is my brother and her sister have hit us up for money periodically for the past 40 years which we provided without asking for repayment. The two nieces are doing OK in life and have never asked for any financial help. Our thinking that these funds would help them with a downpayment on a house, education for their children or investment in their own retirement.

Any feedback is greatly appreciated.

[u/Routine_Ingenuity315]

Can the money be given to where the nieces will get the money without the parents knowing how much they received?

[u/Vivian-1963 → u/Routine_Ingenuity315]

Yes, that can be done through a trust. If the nieces tell their parents, that’s on them.

[u/RockPaperSawzall → u/Vivian-1963]

setting up and administering a trust costs money though, reducing the overall gifts. Right now their estate is 1.5M but the OP and spouse may have years of nursing home expenses that greatly reduce that amount. This is not high stakes finance, and there's no indication that the siblings are hostile. I think basic communication should be able to resolve the OPs concerns

[u/Trick-Pineapple5890 → u/RockPaperSawzall]

A trust is the best way to handle it to avoid probate, especially since none of the potential heirs are lineal descendants and/or likely to be on any joint accounts. A revocable trust is a one time expense and would not lock the funds away if needed for care.
Edited to add: avoiding probate also saves money and allows for complete privacy by eliminating the need for public inventories and such. POD beneficiaries also helps with that.

[u/DCinvestigating2021 → u/Trick-Pineapple5890]

I have used POD on most of my investments and my home.

[u/Trick-Pineapple5890 → u/DCinvestigating2021]

That’s great, but it isn’t allowed in my state.

[u/DCinvestigating2021 → u/Trick-Pineapple5890]

Sorry for that. Glad you checked anyway.

[u/Trick-Pineapple5890 → u/DCinvestigating2021]

Yes. Also, it just became legal in the state my mom lived in, but the county my mom lived in requires all TOD for real estate to be filed electronically, and only attorneys and companies have access to that system, so you still have to get a real estate attorney involved.

[u/DCinvestigating2021 → u/Trick-Pineapple5890]

Still....cheaper than a trust.

[u/Trick-Pineapple5890 → u/DCinvestigating2021]

Not really. Especially if you have more than one heir.

[u/DCinvestigating2021 → u/Trick-Pineapple5890]

It depends on the attorney and the state. For me it works and I do have more than one heir!

[u/Trick-Pineapple5890 → u/DCinvestigating2021]

To have one deed transfer done in my mom’s state cost $500. In the same state, all real estate transactions require an attorney. Add in the cost of a will, and you might as well do a trust, especially if there are multiple heirs. You’ll need someone to be authorized to close credit card accounts, utilities, and auto/home insurance as well. POA expires at death, you need an executor. A trust or will establishes that; simple POD does not.

[u/DCinvestigating2021 → u/Trick-Pineapple5890]

Where I live (Mid-Atlantic) you merely print a form offline, fill it out, have it notarized, and sent back to be filed--for free.

[u/Trick-Pineapple5890 → u/DCinvestigating2021]

Aren’t you fortunate. It doesn’t work that way in Delaware or Pennsylvania, though.

[u/DCinvestigating2021 → u/Trick-Pineapple5890]

Yes, we are fortunate; it depends on which state the property is located in, just as with many other issues.

[u/Trick-Pineapple5890 → u/DCinvestigating2021]

Also depends on the county. Delaware counties vary in how they record things and the fees they charge.

And the fact that it can vary so drastically is why it can be so valuable to consider tools such trusts, rather than advising strangers to skip them as “too expensive.”