how to gift with restrictions?

[epilnk]

I come from a low income background and had a rough start as a young adult. When we had a windfall I set aside a sum to make sure my nieces and nephews had a nest egg when they launched, so they would have a more security than I did.

My eldest nieces already received theirs, but one (age 28) has not. She has mental health issues she almost didn't survive, she has ongoing trauma from her early childhood (she was removed from her birth parents by the state), and she's autistic with ADHD, and bipolar. She is "independent" with a job and an apartment, but continues to be heavily dependent upon my brother and sister in law. Because her issues are so severe and challenging I have deferred to my brother, who does not believe she can handle this amount of money (I agree). I don't believe they hold guardianship.

Since the rest of the cousins are coming of age to receive theirs, I am increasingly uncomfortable with withholding the money designated for her, which she does not know about. Unfortunately she recently started a gofundme to fund her dream, which is pretty much the worst "blow up your fragile stability" idea ever. So I know how she will use the money if it is given to her outright. We can also predict this passion will pass once she has time to see how unrealistic it is, since that has been a pattern, but her impulsivity is severe and I can't tell if it is being complicated by mania.

What are my options for gifting money to an adult while leaving it under someone else's control? Preferably my brother (she's not stupid, she knows she needs help and she loves and trusts her parents). Also she doesn't "need" the money since my brother can afford to subsidize her. But I don't want to keep it for her, because I suspect it will trigger some of her issues if she finds out I'm giving money to her cousins but not her.

[dukeblue219]

It's going to be a horrific family mess when she finds out her siblings received a large gift and she didn't because of her disabilities.

My sort-of solicited advice? Give her the money, make clear it's a one time thing, and see what happens. She might blow it, but... so what? That's her call with her money at that point.

There's no perfect answer though.

[crefwatch]

It's not a simple answer, but you may find looking up "Special Needs Trust" useful. Even if the money is not enough to support the ongoing expenses of a Trust, it may give you some ideas. One of the reasons for Trusts is the many states that (quite reasonably) try to recover public money they spent of the care or treatment of someone who has no money to pay for it. One obvious example is Medicaid, but there are many others.

Another approach would be to buy an annuity for her, but that would be a much smaller amount of dollars for her to "get" each year. But it avoids the expenses of a Trust, and having to find (or pay ... ) a Trustee. Alas, it is sometimes possible for a spendthrift (not characterizing your niece, just talking about the issue) to "sell" an annuity for a big lump-sum of LESS money than you spent to buy it!

[CAsage]

While it's difficult to treat family members differently... you are under no obligation to gift anyone. If this person has some level of sense, meet with her over lunch or dinner, and tell her you have earmarked XX dollars for her future, and will be more than happy to pay for any plans or expenses that you approve of. Yup, it's a gift with strings ... but she already knows she has strings. This will give her the challenge to come up with some good plans for the money - education, life style comforts, reasonable treats.... I have offered to reimburse some less-affluent younger relatives for completing a degree - not until then (or at least, a semester at a time, passing grades, not free cash).

[IowaFarmBoy]

I think it would help the group to answer if we had some sense of the magnitude of your intended gift since it seems like that would impact options available. For a gift of $10k, I like the concept of gifting to your brother or CAsage's idea of telling her it is available for a plan that you approve of. If it is millions, it seems like a trust would be considered.

I think you are smart trying to get in front of this before she begins to think she has been left out.

[Coastfical]

If the individual is on disability (which she may well qualify for) - a gift of outright cash could jeopardize her benefits and eligibility. Also consider if the money might be used for drugs, swindlers, etc Consider paying directly for something (other than housing or food) that would be appreciated (travel? Household goods? Medical or additional support, education or training ?)- your generosity is very kind but beware of negative unintended outcomes.

[gavinsiu]

You could setup some sort of spendthrift trust and set someone else (a family member or a professional for a fee) as the trustee. As Coastfical pointed out, you need to be careful when you give money to someone with disability since it can cause her to become inelligible for certain programs that have a income or asset limit. You should hire an estate lawyer when you decided to set something up because it will be complicated.

[alex_686]

I would start by asking her what she wants out of life. You don't even have to mention that this is the start of a gifting process. In fact, I would leave that out at the start.

Trusts have been mentioned. A adjacent idea would be to buy a condo for her. Make sure the association dues are reasonable and manageable for her. Maybe put it in a trust, maybe not. This would give her a place of stability and permeance. A condo with a high ownership ratio tends to be a more stable community than that of a apartment.