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Tillem & McNichol

Len Tillem and Rosie McNichol

Dear Len and Rosie,

My mother is 78. She was just diagnosed with an aortic aneurysm that can “rupture at any minute.”

She has lives in an apartment and has little more than $51,000 in an IRA, a checking account, and a car she’s still making payments on.

There are two children: me and my sister. My sister is single, 43 years old, and is a recovering heroin addict on methadone therapy. She’s also on SSI and Medi-Cal.

The current beneficiaries of mom’s IRA are me and a former boyfriend of my sister.

I’m trying to convince my mother to create a special needs trust where I would be the trustee for my sister so she won’t lose her benefits.

Mom trusts me, but worried about me stressing out my sister if I say “no” to her. Mom has a very long history of codependency.

Keith

Dear Keith,

Your mother has two realistic options.

Either she creates a special needs trust to inherit your sister’s share of the IRA, or she leaves the entire IRA to you.

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It’s apparent your mother named your sister’s then-boyfriend as beneficiary so he could spend the money on her, as a sort of trust.

That may have a chance of working well if a family member is the beneficiary, but a friend of your sister? They aren’t even friends anymore.

Your mother shouldn’t have to keep up with whomever your sister is dating. More importantly, if your sister has drug addiction problems there’s a good chance her friends do too, and they shouldn’t be in charge of the money.

Your mother could just leave the IRA to you, and trust you to provide for your sister. It’s the easiest way to do it.

But if you die unexpectedly or decide not to follow your mother’s wishes, your sister loses her inheritance. You would also have to pay income tax on all distributions, even on money you spend on your sister.

A special needs trust is better. But if you’re in charge of your sister’s money, then you’re the one she’ll call at 3 a.m. demanding money.

Even if you give it to her, she’ll also blame you when the money runs out. If your sister aggravates you already, think about how much worse it will be when you become the gatekeeper to her inheritance.

If it will be too much for you, let someone else be your sister’s trustee, perhaps a professional fiduciary.

Either that, or your mother can just name you and your sister as beneficiaries directly.

Your sister could set up her own special needs trust if she wants to, as long as she’s under age 65 when your mother dies.

Len and Rosie

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Len Tillem and Rosie McNichol are elder law attorneys. Contact them at 846 Broadway, Sonoma, CA 95476, by phone at 707-996-4505.

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