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My ex-husband left me his $150,000 pension — his sister says it was an oversight My ex-husband left me his $150,000 pension — his sister says it was an oversight

My ex-husband left me his $150,000 pension — his sister says it was an oversight

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Dear Moneyologist,

I have read and enjoyed your column for several years, but never imagined that I would find myself in a position to be writing you for advice. However, recent events leave me seeking your help.

In early November, I learned that my 63-year-old ex-husband died. It had been 17 years since we parted ways and at least five or six since I had seen him, but I felt the loss. You couldn’t know Larry and not feel the world was a little poorer without his expansive personality.

Three weeks after his death, I received another shock — a notice that I was the beneficiary of a $150,000 pension from his employment with the State of Wisconsin. I wasn’t sure what to make of it, but initially it didn’t seem a stretch that he had intentionally left me this money. He never remarried, we were quite close for a few years following our divorce, and I found it possible that he was belatedly recognizing the significant financial sacrifices I made during our seven-year relationship.

It also made sense as I knew Larry’s brother Mark couldn’t inherit the money. He resides in a senior community that provides care for life in exchange for receiving the majority of your personal savings and income. Larry also has a sister, 76, to whom he wasn’t close during the time I was with him. Given her personality and the fact she lives in Arizona, I would be willing to bet they never grew closer.

My ex-husband’s sister Molly subsequently contacted me saying she believes my inheritance was an oversight her brother never bothered to correct. She then asked me to share the pension directly with her and she would make sure to get some of it to Mark and the girls.
Mary in Wisconsin

My only question about the inheritance related to a “special friend,” that Larry had been with for about 8 years. Su and Larry never lived in the same city, much less the same house. Instead, they talked on the phone, exchanged emails and saw each other several times a year. Given that this was the cordial relationship pattern that Larry and I fell into for about three years after our formal split, I am confident this arrangement would have been perfect for Larry, who had Asperger’s Syndrome and wasn’t comfortable with close, prolonged contact with people.

Larry’s sister Molly has subsequently contacted me saying she believes my inheritance was an oversight her brother never bothered to correct, even after being diagnosed several months ago with metastatic lung cancer. He didn’t leave a will and failed to name a beneficiary on his life insurance policy, so I think oversight is a fair claim here. She made a compelling case that Mark, his daughters and she could really use the money. She then asked me to share the pension directly with her and she would make sure to get some of it to Mark and the girls. To be honest, I’m not confident the money would get past Molly’s bank account, so this is not an option for me.

Also see: My father died and my sister emptied the $100,000 in his bank account

I checked in with Larry’s brother, Mark, to determine his thoughts. He didn’t share Molly’s concerns about sharing the money I inherited. An IRA that would have gone to Mark was split between his daughters and he received half of Larry’s life insurance, which apparently he can have since it isn’t taxed. Molly received the other half of the life insurance, so she inherited at least $25,000. I didn’t ask what the policy was worth, but know that it was at least one year of my ex-husband’s salary as he was a state employee so $25,000 is a safe base estimate.

I do believe I have a case for feeling justified in keeping a good chunk of the money. When Larry and I were married, we lived in a very small town where he worked as an attorney and I was a newspaper reporter earning about $20,000 a year. We shared our household expenses, which left me very little to put toward retirement. When he realized he needed to quit law, I supported both of us for a year while he transitioned to a new career. He actually out-earned me that year through some consulting work he did, but I didn’t realize that until after we filed our taxes — and he didn’t put any of it toward our living costs. When we divorced, I was too young and proud to be smart about the process. I left with what was “mine” — an older car, a few pieces of furniture and my $3,000 retirement fund — and left him with at least $50,000 in retirement funds (I didn’t know the full extent of his retirement savings), a few thousand dollars in a personal savings account and a new car.

Don’t miss: Can I leave my stepchildren nothing if my husband dies?

After taxes, I’m likely to inherit about $95,000. Legally, I know I can keep it all. My question is, how much of it should I keep? And who do I give some to? My friends and family think I should keep all of it. My current husband says he trusts me to do what I think is best. I’ll admit I’m feeling greedy, so I’m interested in your reaction to my thoughts about options:

1.Name Mark’s daughters and grandchildren as heirs in our will. My husband and I have no children, so this is an easy way to express my gratitude to Larry for the money — albeit delayed gratitude, given that we are healthy and 52 and 46 respectively. Our net worth is currently about $550,000, and I expect that to grow in coming years, as we will have no debt after paying off our $50,000 mortgage and will be saving about 25 percent of our income for retirement.

2.Create college funds for the two grandchildren, putting $2,500 in for each in 2017, and contributing $600 annually to each until they are through college. The kids are four and six years of age. My only concern is that they won’t attend post-secondary schooling (their mothers didn’t finish college) and that gift ends up being of little use. I also thought of creating a similar fund to help with things like braces, dance lessons or sports, but I think that could ultimately be fraught with complications.

3.Give Su, Larry’s “special friend,” some of the money. I know through mutual friends that she is not rich. In fact, her house burned down a couple of years ago and she lost everything in it. She’s 63, so she won’t be earning much income in future years. For her, I was thinking of: #1 $5,000, the amount I was going to donate in Larry’s name to a couple of his favorite causes before learning I was quite possibly not his intended heir. #2 $10,000, which actually feels much fairer, but which I am fighting because I am human and greedy.

If you have time and this situation interests you, I would appreciate any thoughts you have on these options or others you might think of. Money really makes you face who you are and challenges your assumptions about yourself — at least that’s what I’m experiencing right now. Please help me be the person I want to be — fair, kind and just. Thank you.

Mary

Dear Mary,

Your letter is both compassionate and self-aware. You are human and you should consider keeping all of it. Whether we would like to admit it, we all would have the same thought.

Presumably, the rest of his estate went to his children and your status as his ex-wife (after seven years of marriage) is recognized here. They are years you could have spent building your own future or one with someone else. What’s more, no-one has the right to tell you what to do or judge your relationship. Some might say it was an oversight. Others could argue that Larry decided to leave things as they were. You might even say that the universe was looking out for you. Whatever you decide, if you decided to keep the full amount you could do so with a full and clear conscience.

You are smart enough and strong enough to withstand the pernicious and self-serving phone call by his estranged sister, and yet fair enough to not use that as an excuse to blind you to the possible generosity others might appreciate.
The Moneyologist

You are smart enough and strong enough to withstand the pernicious and self-serving phone call by his estranged sister, and yet fair enough to not use that as an excuse to blind you to the possible generosity others might appreciate. I like No. 1 and 2. Create those college funds (they can use them as deposits for a house and/or you can adjust these gifts accordingly if they decide to forego further education) and leave them a token amount in your will to account for this windfall. For No. 3, you say option #2 would be fairer; both options are good, but go with your gut and choose the larger sum.

All of this will help you to enjoy this inheritance. You had a lot of respect for your ex-husband and, I have no doubt, the feeling was mutual. Your thoughtful letter is proof of that.

*Names of relatives have been changed.

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