Estate planning for sister

DH has a younger sister, DS, age 68, who lives in a neighboring state about 8 hours drive away. DS is retired. She smoked for many years but quit. She has high blood pressure and an inoperable carotid artery obstruction. Their mother (who did not smoke) developed dementia at about age 80 and lived to about age 84. She lived in assisted living for about 3 years.

It’s unclear whether DS has early dementia but she is very disorganized and cannot manage money. She blew hundreds of thousands of dollars from the sale of the family business in 2019. (I don’t know the details.) DS’s sole source of income is Social Security of about $2,000 per month. She has Medicare and a Medigap policy (I don’t know the details). DS says that she is able to live on this income.

DH has created a Revocable Living Trust with DS as its sole beneficiary. This trust is funded with about $235,000 and the house that DH inherited from their mother. DS is living in in the house.

The house that DH inherited from their mother is worth about $350,000. A family of DS’s friends (wife, husband, son, girlfriend) live in the house with DS. None of them pay rent to DH. They do pay for utilities. The trust pays the insurance, taxes and maintenance.

DH would like advice about how to distribute the money in the trust for the greatest benefit of DS. The trust specifies that the trust will not provide money for medical care if DS qualifies for Medicaid or other government assistance.

DH is reluctant to send a regular stipend to DS because she is likely to blow it. He wants the money to last for her lifetime but wants to make sure it’s spent on DS. It’s possible that DS will need a car or other material asset in the future.

DH would appreciate guidance on managing this situation.


DH can use DS’s trust to pay DS’s nondiscretionary expenses for her. This reduces the opportunity for her to make poor decisions. DS’s day-to-day responsibilities and money are unchanged.

If it is important to make the process easier for DH, set up a credit card and checking account which she owns which only he has access to. Then set up bills to be automatically paid through her CC or checking account. Now most of his activity will be making sure there’s sufficient cash in the checking account to cover the bills. Regular financial reports to DS and proper record keeping is critical to avoid credible accusations of self-serving.