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Post: The Moneyist: ‘I ask for nothing’: How do I protect my mother’s assets from my stepfather and his two adult children?

Dear Moneyist,

My mother is married to her second husband who has two adult children from two previous relationships where only one of his children carries his legal last name. He is my stepfather.

I would like to know how I can protect my mother’s assets in case he dies, or vice versa. I ask for nothing and only want my mother’s hard work to remain with her until the end of her days.

If my mother’s husband passes away, will his stepchildren inherit from my mother’s estate? Or will they only inherit from their father’s estate?

There is no legal agreement to separate their assets, and he doesn’t believe in writing a will. They married overseas. He has assets both in the U.S. and overseas. 

They currently live in Pennsylvania, having moved there from New York.

Concerned Daughter

Dear Concerned,

Your stepfather is not interested in writing a will. Good for him. I wouldn’t recommend it, but your responsibility is for your mother, and you should explain to her that writing one gives her the peace of mind that her estate will be divided according to her wishes.

Your mother could set up a revocable trust for certain assets, so they don’t go through probate and instead go the beneficiary of that trust. Probate is like airing your laundry in public. She can also earmark items of sentimental value for you and her husband. Any inheritance your mother receives is separate property.

She will also want to appoint a trusted executor to carry out her wishes and, in the event that you predeceased her, what would she do with her estate that she does not own with her husband? Does she have favorite charities? Would she like to divide certain assets among her stepchildren?

There are some inbuilt tax advantages to being an heir. If your mother had a previous home, you would receive a “step-up” basis on capital gains. That is, profit on any sale would be calculated as the sale price minus the recent appraised/market price of her home — and not the original purchase price. 

‘Probate is like airing your laundry in public.’

If your mother dies without a will in the state of Pennsylvania, your stepfather inherits half of her intestate property under the law, and her children — that is, you, assuming you are the only child — will inherit the other 50%. So she is essentially giving over control to state laws.

Any other community or marital property, including their home — if they own it as joint tenants with the right of survivorship — or bank accounts that they co-own, will also go directly to your stepfather. (She can name beneficiaries for solely-owned accounts.)

Stepchildren do not have any rights of inheritance. So if your stepfather predeceases your mother, his children will receive half of his intestate property if he dies without having left a will. You are not one of those legal heirs, so you would not inherit anything from him.

Regardless of how close you are to your stepfather or his kids, dying intestate can lead to all sorts of problems, such as people pilfering items of value from the family home. Encourage your mother to make one now while she is in good mental and physical health.

Learn how to shake up your financial routine at the Best New Ideas in Money Festival on Sept. 21 and Sept. 22 in New York. Join Carrie Schwab, president of the Charles Schwab Foundation.

Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.

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