A guy named Bob asked me a doozy of an money/ethics question this past weekend. I’m fascinated by this question, mainly because I’m torn as to what the answer is.
Here are the basics
Bob’s grandma died. When she died, she left Bob, his cousin, and his younger brother her house. The three sold the house and got to keep about $50,000 each. A few months later, Bob and his cousin were found to be beneficiaries of a life insurance policy on his grandma that was purchased well before Bob’s brother was born. The life insurance policy was for $47,000. This means that Bob and his cousin each received $23,500. Bob’s brother received nothing, as he was not listed as a beneficiary on the life insurance policy. Bob’s family (mom, dad, and brother) didn’t even know that Bob was the beneficiary of this forgotten life insurance policy.
Bob felt kinda strange about this. He decided the best thing to do was to give his brother about $8,000. That would have reduced Bob’s share to about $15,000. Had Bob’s brother actually been one of three original beneficiaries, then Bob would have only received about $15,000. So Bob decided that he would cut in his brother, and then only take about $15,000. Well, Bob’s brother didn’t seem too excited about being given $8,000. In fact, Bob’s brother called their mom, and then Bob’s mom was mad that Bob wasn’t giving the brother half. She felt that Bob was being selfish. Bob was absolutely dismayed that his generous gesture was dismissed as greedy.
Here are some other factors to consider
- Bob didn’t feel comfortable asking the cousin to cut Bob’s brother an $8,000 check too.
- Bob’s grandma had nearly 24 years to change the beneficiary on her life insurance to Bob’s brother – she chose not to.
- Bob is 31 and his brother is 23.
- Bob’s mom and brother both think Bob is being greedy.
What do you think? Feel free to leave a comment below.
Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.
Seems like Bob is doing the right thing. If the brother has an issue, it should be with the cousin. It amazes me how someone can receive a gift and then get upset that it isn’t enough.
I think initially that Bob should have split his share of the life insurance with his brother 50/50. It seems an obvious oversight that Grandma didn’t include Brother in the policy. But, they can’t force cousin to share his part of the payout, so it’s up to Bob to make it right. So if Bob just split it 50/50, they are both getting over $11000 that no one expected!
HOWEVER, I totally see Bob’s logic, and I also think that once the offer was made, Brother should have been happy with what he was given and not go crying to Mom.
At this point, nobody is fully right, and nobody is fully wrong. But to keep the peace, it seems like Bob should suck it up and split it evenly. He wasn’t expecting this money anyway! Whatever they both get is a bonus.
Have to agree with Jared! Be grateful for what you did get!
His brother is a jerk. Rather than be grateful for a generous offer, he is pouting about ONLY getting $8,000. Bob would have been completely justified by not giving the brother anything. Tell Bob I’ll be his pretend sister if he wants to give me his brother’s share! I will be SO grateful! =)
It seems that, all things considered, Bob was being thoughtful and generous. I think he did the right thing. As you said, there was plenty of time for his brother to be added as a beneficiary.
More importantly, it’s terrible that money issues come between people at difficult times.
Inheritances are guaranteed, nor should they be taken for granted. I told my father to spend every dime he had before he died, because I certainly would if he left it to me. I did that to remind him that he earned the money, and he should have the pleasure of spending it as he pleased. When my mother died in 1990, my father added my only sibling (my brother) to all of his accounts so when Dad died, it all passed to him. The day after the service, my brother asked me to take the day off from work. I thought he was grieving and needed support. Rather, he took me with him to every place my father had money (a couple of small CD’s and a modest amount of cash). He asked the ladies at the various banks to show me the balances in the accounts and told them he wished to close the accounts, and to issue two checks, one in his name, and the other to me. He had no legal obligation to do that, OR he could have simply given me a check for any amount he deemed appropriate, but he didn’t. I could ask my brother to hold a $20 bill for me… write down the serial numbers…. and ask for it back years later and I will almost guarantee you that I would get the same $20 bill back from him. As you know, legally the beneficiaries of the policies have no legal obligation to share the proceeds. I will go now to the spirit of the inheritance, and perhaps the addition of the younger brother was an oversight from this forgotten policy. Personally, I think this is a family decision. If the cousin is set on keeping his windfall, that will just tell the rest of the family alot about his character. You can’t MAKE him do the right thing – but he sure can make himself look like an ass. Just my humble opinion.
Ooop… Inheritances are NOT guaranteed!!
Hi, this is “Bob” from the story.
Thanks for your perspectives!
I would only change a couple things in the story:
My mom wasn’t mad, she was just disappointed.
My brother wasn’t really complaining, he was just grumbling really… but is still under the impression he should be given half, and will ultimately be given half. Things are a little awkward right since that’s not the direction I’m leaning. But they are reasonable people so I expect they’ll eventually come to terms with whatever I decide. Your thoughtful comments are very valuable to me.
Thanks for weighing in, Bob. And thanks for the corrections!
This is such a challenging situation. I’ve been stewing on it for the last 48 hours, and I still don’t know exactly what I think.
This is a totally different idea… take the money in question and spend it on a family trip, a weekend, or some other vacation that would allow your entire family (including your mom and your brother and other family members) to spend time together. Instead of having hurt feelings about who got the most, use the money to spend time together.
What about option 4? Give the brother all of the money. (If someone takes your cloak, don’t withhold your shirt also.) If you teach a lesson of fairness by either giving less than half as originally planned, or send a different message now by meeting his request to pony up, how much more of an example would it be to give it all up? For you? For him? I think everybody wins on this one. Man, it’s so easy to give away money that isn’t mine. I should run for Congress.
You had me at congress. You had me at congress.
Bob, do you think that your brother was simply omitted by error because the policy was simply overlooked? And does you cousin have siblings that got “stiffed” too? Just curious. For what it’s worth, never amount is life changing, and is it worth having any kind of residual hard feelings? Are there any other contributory circustances (kids needed braces that maybe you can’t afford?, etc.) that could trump the dividing of the windfall? That’s why I could never work in probate. Windfall inheritances can bring out the worst in people. Hated to hear from great, great nieces and nephews that never MET their relatives that bequeathed money to them and they bug you every day to get it. No respect.
Here’s a wild thought: Maybe grandma knew EXACTLY what she was doing by not choosing to name a 3rd beneficiary. Nobody has focused on grandma in this situation, and she is the MOST important figure, because she is (was) the owner and determined WHO was to receive the death benefit. Maybe Bob and Bob’s cousin were her favorites? Maybe Bob’s brother was too young to display responsible spending habits and she felt it would be better left to the other two. We don’t really know WHY, we just know what IS…and the beneficiary form is – “what IS”. Keep the money, Bob. Chalk it up as “this is what grandma wanted” and if you still feel bad about it…buy your brother a really expensive birthday present. Let this be a reminder to everyone else to review your beneficiaries regularly.
I love the idea of a family vacation that includes everyone! What if Bob gave the Brother the $8000 and then spent his $15000 on the vacation? Again, depends on if he has important things in his life that he’d need the money for instead, but otherwise I think the message he’d be sending is that family trumps all. Even when you kinda want to smack them upside the head.
I like the idea of a family cruise or European vacation. If not that, give $11,500 to a charity of your choice and $11,500 to a charity of your brother’s choice…. 🙂 Either way, the money is gone. Neither of you can then be resentful of the toy or investment the other decides to use their portion of the money for.
I think the issue is with the cousin. If the brother wants 1/3 of the total payout, he needs to take it up with the cousin. Bob is clearly doing what is “right”, and should not be forced into giving up more than his share just because the brother doesn’t want to talk to the cousin about it. I understand that the Bob says he doesn’t feel comfortable asking the cousin, and it seems that it should be the brother’s responsibility to do so at this point, if he wants to get the full 1/3 (which he is not technically entittled to anyway).
To me this isn’t a question of ethics, but generosity. Bob was being very generous to offer anything. I wouldn’t fault him a bit if he decided to not offer a dime and honor what Grandma decided by keeping the beneficiary as originally written.
I think Lynn brings up a good point here. Perhaps you could have a conversation with the cousin, not about giving your brother money, but instead as for their opinion. Maybe the cousin is having the same dilemma as you.
So… This brother essentially inherits $58k ($50k from the house and $8k from Bob) and is whining about approximately $3k. Bob should give the $3k to his favorite charity or church, etc. but NOT the whiny brother.
It’s a tricky situation. Had my Grandmother been able to update the policy she most likely would have left everything to me, or split between me and my brother. My cousin is heir to a large fortune on her other side so she is beyond comfortable. Our sides of the family are cordial but became skeptical of each other during my grandmother’s decline.
Another dimension to this is that I have 15k in student loan debt and my brother has 15k in surplus. But I thought about it and don’t think it’s right to give him less for having made smart money choices like not taking out student loans and going to state school.
You’re also right that in the grand scheme of things it is a trivial amount and to not lose sight of that.
I can guarantee you the cousin is not having the same dilemma. For all she knows I didn’t tell my mom or brother how much the check was for. But you’re really right about asking her for advice. There’s a minute chance that she’d offer 8k, then I could offer 8k, and we’d all be equal. That might be the best possible outcome.
The disappointing aspect that I’m realizing I will have to come to terms with is that I’m probably not going to get the appreciation I want for this, my brother/mother will see it as something I had to do and I won’t get much more than a “thanks.”
Sigh.
I disagree that it’s the younger brother’s responsibility to ask the cousin for $7000 of his inheritance. If Bob had said something to the cousin, like, “Hey, my little brother was left off of this, and it seems to be an oversight. Would you be willing to give him $7000 of your piece if I give him $7000 of mine?” that would have come off as less awkward than, “Hey, I got left out. Could you give me $8000 of your money?” Asking on his brother’s behalf makes the whole process seem more fair and less like begging. Bob shouldn’t put his brother in the position of having to ask the cousin for the rest of the money. The decent thing for Bob to do would have been to man up and talk to the cousin OR just give his brother half of what he got and let it go. Since time has passed and he didn’t do the former, he should do the latter at this point. It’s not as if Bob did anything at all to deserve that money more than his brother did. You can’t have a finders-keepers mentality when it comes to family. I side with the mom on this one…although I don’t think that it’s fair to call Bob greedy. I think that he was just put into an awkward situation and made a mistake.
Give it ALL away to charity. Tell your mom/brother that you felt they were completely correct…fairness is important. And what would be really fair is that some underprivileged people who don’t even have money to buy food get that money rather than either of you.
A. They are happy with that – all is good and you earned yourself some great karma.
B. They are mad at you. In this case you know for sure that it was not worth giving even a penny to a person who does not want to help others. you still learn great karma.