Wills, Trust funds, Gaurdian????????

[Jeff]

If the wife and I die "before our time", what can I do to make sure my kids are placed in the custody of the person of our choice and our assets are given to the children? Should a different account for their caregiver, to cover the extra financial burden of raising children, be established? Is a will enough or should we make a trust for the girls? Anything else I should consider? Any idea on legal fees for such a document?

Any help or suggestions would be great. Thanks.

[lisa_spyder]

We've agonized over this too...I'll be interested to read suggestions.

PS: sitting down with the accountant next week to talk about the financial side of this - the legal side can be covered in a will. Now with both my parents gone we have to change tack somewhat.

[Scooter]

I would contact a good trust and estates attorney and discuss it with him/her. A good estate plan is something that really should be done by a professional. Think about setting up testamentary trusts for the children.

[LeeH]

Jeff,

We went through this a couple of years ago. We used an estate attorney recommended by our State Farm agent. After reviewing our situation he suggested we set up a living revocable trust. Total cost was $1500 including the trust, wills, advanced directives, etc. The attorney came to our house and talked to us for about an hour before it cost us a penny. Give me a call if you want his name and number.

[cab83_750]

I am looking into this myself. However, one of the clauses of my will states that my 2 kids splits everything equally. What is funny is "roughly" as follows (lets us assume I am worth $1,060,000):

1. Kids gets $530,000.00 each.
2. At age 21, the child gets $30,000.00 (no question asked).
3. At age 32, or upon completion of a Bachelors degree, the child gets $250,000.00.
4. At age 42, or upon completion of a Masters degree, the child gets the remaining $250,000.00.

The idea here is that they will go to school and will end up with education and a degree. Or they can be lazy, and hopefully, by the time they are 32 or 42, they would be smart enough to know better.

Now, after graduation, and they still 'blow' the inheritance, at least they would have some 'education' to be good workers.

[LeeH]

You can add all sorts of controls... I mean incentives via the trust. We set up a $50K college graduation "gift" and $50K for use as a housing down payment after age 21. Other than maintenance she would get the rest at 30, 35, and 40. We also included a clause that states the trustee can withhold funds due to drug or gambling problems.

[Jeff]

Thanks for the responses. Keep them coming.

Did any of you set up a fund exclusively to take care of the guardian(s) financial burden of raising your kids? I want to know I will be leaving my girls some financial security for the future and their share not be used to "raise" them.

[LeeH]

We set up $1000/month to the guardian with some assistance available should a larger house be needed.

[Scooter]

You can set up just about anything you and the attorney can think of. It is a very responsible move on your part to be thinking about your estate planning and how your children will be taken care of if something happens to you. Roughly 80% of the people out there don't have an estate plan. PM me if you like. I will be happy to talk to you.

[Dantilla]

This is a case where an expensive attorney is the cheapest way to accomplish your goal. Money well spent.

Another idea- A yearly matching fund. If the kid earns $75,000 a year, he gets another $75,000 of the inheritance. If he earns only $15,000, he gets an additional 15K. Quite a motivator.

I like a combination- a yearly match, with bonuses for specific achievements like earning a degree.

[Mothy]

Something to also consider is how the money flows once you are gone - important if your wife is of an age where it is likely that she may re-marry. If you have left your estate to her and she then remarries and dies before her new husband, your estate does not automatically flow to your kids unless you have made provisions/conditions in the original will - the new husband may walk off with a sizeable chunk.

One way may be to leave your estate to your kids with the condition that your wife has the benefit from it till she dies.

Also consider why you want to wait till you are dead before they benefit. If all you are doing is sitting on the money, use it to help them out whilst they are young and you get to see the results. Life is short and you're a long time dead.

As for having enough money to look after young kids if you are both killed - well thats why I have life insurance. As I get older and my debts get smaller and kids grow up and become independant I have less life cover. The life cover is calulated to provide enough to support the kids till they are old enough.

The last thing I would do is seek to control the kids once I'm gone via conditions and special clauses. Imagine if your own parents did it to you. (Perhaps they did )

Tim

[CRH911S]

Best advice anyone can give you is to see an attorney that specializes in estates, wills and trusts. These guys are usually up to date on tax issues as well. From the sound of it you might consider a trustee to deal with money matters, living expenses, education, medical and investments while the children are minors and even beyond that so they can concentrate on their studies while in college. At some point, or not, the trustee that you designate can be given pretty broad powers as far as the money is concerned. You can specify any number of options the trustee may choose with respect to assets, investment, disbursements and expenses. A lot of work and money goes into managing a trust. If the trust is substantial then I would recommend something long term and minimal tax liability. Just so you know, a good California estate attorney runs about 400.00/hr, and accountants substantially less but remember you get what you pay for. Just my .02 worth....

[LeeH]

Originally Posted by Mothy

The last thing I would do is seek to control the kids once I'm gone via conditions and special clauses. Imagine if your own parents did it to you. (Perhaps they did )

The trick is to protect the kids and the money. Handing an 18 year old a couple of million dollars wouldn't be a wise move. I plan to strongly encourage my daughter to attend college. If for some reason I'm not around then I'm hoping the $50K graduation gift will encourage her in my absence.

[lisa_spyder]

Yep Wayne,

This is what we are struggling with - just how much is gonna be enough? We're not wealthy...but we certainly are planning to ensure the kids are catered for in the event of our (both) untimely and premature departure. The worst of it for me is asking someone else to take on the responsibility of our children (in other ways, not financially) should we meet an untimely demise.

[Dueller]

DISCLAIMER: I AM NOT LICENSED IN AZ...general info only

Best advice so far is to see an estate planning atty. Most will not charge for an initial consultation. You need to feel comfortable with them. If you don't absolutely understand what they are recommending or if they talk down to you about any proposed action, find siomeone else. Cost depends on the complexity of your financial affairs. Expect to pay between $500-2000. Since your estate is fairly substanrtial, you need to consider tax consequences of what you do as for as disbursements before and afetr your demise. Atty may want to bring in a CPA for safe measure.

Go in with your extensive notes prepared in advance as to what your current and anticipated assets are and what you hope to accomplish and let the atty advise on how to achieve your goals; i.e., trust, living trusts (often recommended but rarrely needed unless we're talking an estate in the mid-high 7 figures), advanced medical directives, living wills, etc, etc..

It may be as simple as a will for you and your wife with language about setting up a trust at your death for the kids and directing who is to be their guardian and/or trustee. You also need to consider what to do if one spouse predeceases the other or if you die in a common disaster. You need to consider contingencies such as a child predeceasing you and children born after your will is executed. You essentially can do whatever you want with your property so long as it doesn't violate such things as the rule against perpetuties (i.e., property has to vest at some definite point in the future). You can direct who is to be the kids guardian and name someone else to be the trustee over their financial affairs. The trust can give as much discretion as you choose or as restrictive as you choose. You can set up an educational trust, a home downpayment trust, a living expense truts or as many as you like...realistically one trust should be fine with enough language to dictate what from that trust can be used for reasonable and necessary living expenses, future disbursements, how it is to be invested, whether only income may be used or whether the principal can be used....essentially it is only limited by your imagination.

A few basic pointers...yes you can direct in your will who is to be the guardian for your children. I would name an alternate guardian in the event the first person of your choice is unwilling/unable to serve. Yes you can direct that a trust be set up for the benefit of your children...the trsutee (and alternate) does not have to be the same person as the guardian if you so choose. You can set up separate trusts for each child or one for all the kids. You can establish the trust noiw or direct hat it be established at your death. The trustee will have to make regular accountings (usually annually) to the court to assure your directives are being followed. The trustee does not have to be a lawyer or banker.

Bottom line is each case is different based on your situation and goals. For example, there are certain vehicles you can use to establish educational funds that have tax advantages to you now even if you don't meet an untimely demise (as if any demise is timely). Ultimately you can achieve just about anything you want. Also keep in mind that if you have life insurance, it passes outside of your estate and is therefor not taxable. Absolutely do not allow any one to advise you to make your estate the benifiary of your life insurance as it becomes taxable.

Weirdest case I ever dealt with was a doctor who dictated if he predeceased his wife his testicles were to be cremated separately and placed in a gold capsule that his wife had to continuously wear on a necklace if she were to continue entitlement to a trust he set up.

In any event its a very good idea to be dealing with this now and when age appropriate keep your kids apprised of the general terms of your wishes.

[Dueller]

Originally Posted by Wayne at Pelican Parts

Trouble is, $250K at that time will be just enough for a downpayment on a 2045 Honda Civic!

-Wayne

Yeah , but $250K invested even conservatively will be a pile o' money in 2045

[cab83_750]

Originally Posted by Dueller

Yeah , but $250K invested even conservatively will be a pile o' money in 2045

Interesting enough, which $250K are we investing: The first $250K or the 2nd $250K? How about if we invest both! Best yet, could we invest the whole $1 million!!!

[cab83_750]

Originally Posted by LeeH

We set up $1000/month to the guardian with some assistance available should a larger house be needed.

I am somewhat lucky. The selected guardians refused the arrangements I proposed (we are very closed-knit family). However, it is there should they change their minds.

[Jeff]

Great info, Thanks.

Dueller, I am afraid if I made a request like your actor client my wife may just go ahead and have my nuts cremated BEFORE I die!

[Moneyguy1]

Remarriage of a surviving spouse: Life estate with the kids as remaindermen. Eliminates the possibility of your hard earned fortune going astray. Ask your atty/financial planner/accountant.