Kids inherit Millions and surrounded by jackals (family)

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Kids inherit Millions and surrounded by jackals (family)

Postby bankmaggot » Tue Dec 18, 2012 9:58 pm

I like some ideas on how to structure my will so my kid's inheritance won't be squandered by their aunts/uncles/grandparents. Note that my family understands very little about $$. My biggest concern is dieing without a will. So I'm making it a priority during the xmas holiday to draw one up. I'm using Nolo's estate planning book to draw up a will that will hold their inheritance in a trust for my 2 kids (17 and 6). I want the trust to provide income to support my kids if both my wife and I pass while their young, and to disperse income at 25, 30, and 35. Most of the $$ will be disperse at 35. I plan to assign one person guardian of my kids and a different person to disperse or make sure the income is being used for the kid's benefit. I believe this is common, so the guardian of my kids don't run off and get an Escalade as a school transportation vehicle.

Any other suggestions?
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby livesoft » Tue Dec 18, 2012 9:59 pm

Get a lawyer and don't dictate from the grave. :)
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby letsgobobby » Tue Dec 18, 2012 10:06 pm

dictate from the grave but get a corporate trustee. you need a lawyer, not a nolo, for something like that to work.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby reggiesimpson » Tue Dec 18, 2012 10:16 pm

Generation Skipping Trust. You will dictate from the grave for the benefit of your children and grandchildren (when they come). It will keep all Jackals at bay. Talk to an estate atty.
Last edited by reggiesimpson on Tue Dec 18, 2012 10:21 pm, edited 1 time in total.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby brainstem » Tue Dec 18, 2012 10:18 pm

I agree. ... Get a good estate attorney
Shop around ... Some of them are knaves, too
We found a good one who charged only for his time to set up the will and trusts
Set up distributions of the corpus in a similar timeframe as your post
We interviewed local banks as trustees and were not impressed
While many push for a local corporate trustee, these days it is easy to communicate
We ended up within vanguard as a co trustee with me
It has been hassle free, low cost, and a reasonable relationship to solve periodic needs, distributions.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby JDCPAEsq » Tue Dec 18, 2012 10:24 pm

This is your third thread and we had been hoping to hear further from you on the prior two. It's always good to know if our responses have been helpful. Will be be hearing further on this one? :wink:
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby therub » Tue Dec 18, 2012 11:14 pm

bankmaggot wrote:Any other suggestions?

JDCPAEsq wrote:This is your third thread and we had been hoping to hear further from you on the prior two. It's always good to know if our responses have been helpful. Will be be hearing further on this one? :wink:
John



I think my wife bought me something off Etsy for Christmas. I don't know what it is yet, but I've been hinting for one of those knit beard hats for some time. Yesterday, I got the mail and my wife received a peculiar hand wrapped package. I noticed the return address on the package was from Susan Stitch, and my wife was quite flustered when I pointed this out. Clearly, Ms. Stitch is busy living up to her namesake, and my wife has finally given in and bought me my ridiculous beard hat which I will use to embarrass her and the kids for the next decade.

In this case, Mr. Maggot is being accused of behaving parasitically. We should not be surprised.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby bankmaggot » Wed Dec 19, 2012 2:49 pm

JDCPAEsq, the forum has been very helpful, though I hadn't responded back in my other two thread. I guess out of courtesy, I probably should have thanked the contributor in a reply. Sorry.

I appreciate all the response. I heard that getting an attorney involved with my size of estate is not worth it. Most of it ~65% will be from life insurance and the rest in retirement/cash/savings.

Can someone give me an idea on how all this work from a high level point of view? If spouse and I die, how does thing evolve? I assume the executor of my estate would contact Vanguard and set things in motion. Also, if I have Vanguard as the trustee, how do Vanguard assure that the $ is being used properly for my kids benefit?
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby mptfan » Wed Dec 19, 2012 2:55 pm

Read my posts in this thread....

viewtopic.php?f=2&t=103346&hilit=+trustee
I eat risk for breakfast. :)
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby mephistophles » Wed Dec 19, 2012 5:13 pm

letsgobobby wrote:dictate from the grave but get a corporate trustee. you need a lawyer, not a nolo, for something like that to work.


Plus one. This is the best way to go.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby brainstem » Wed Dec 19, 2012 7:35 pm

Hmmmm
You don't think your estate is big enough to pay a lawyer for his time ....
If true, You seem to be spending a lot of time and constructing an elaborate will about not very much money....?
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby Eric » Thu Dec 20, 2012 12:20 am

bankmaggot wrote:I heard that getting an attorney involved with my size of estate is not worth it.


But you titled this thread, "Kids inherit Millions," implying that you will have a multi-million-dollar estate.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby NateH » Thu Dec 20, 2012 10:56 am

a million dollars split between a teen and a 1st grader would certainly warrant a basic will, simply due to their ages.
IMHO a will (+health care directive and POA) is a task best left to a pro in your state. We did ours a few years ago for <$1000 one-time fee.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby Grt2bOutdoors » Thu Dec 20, 2012 11:05 am

I would be more concerned about having your choice of guardians be properly documented, followed by establishment of trust for benefit of children. A Power of Attorney granted to your wife and her for you, health care proxy for you and your wife.

A will can be contested, so if for any reason you think "jackals" or "hyenas" are going to show up at probate, its best to throw in something along the lines of "for my relatives, xyz, 123, and bobby - a total sum of $15 in equal shares - but include language that basically states if they contest the will, they will not receive what was left for them and if you wish provide a reason as to why they were left a token amount - no sane surrogate court judge is going to disagree with you if you have justification. Nice?, not really, but if your description is fitting and accurate, well....if the shoe fits, wear it.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby Dianne » Thu Dec 20, 2012 11:36 am

Grt2bOutdoors wrote:A will can be contested, so if for any reason you think "jackals" or "hyenas" are going to show up at probate, its best to throw in something along the lines of "for my relatives, xyz, 123, and bobby - a total sum of $15 in equal shares - but include language that basically states if they contest the will, they will not receive what was left for them and if you wish provide a reason as to why they were left a token amount - no sane surrogate court judge is going to disagree with you if you have justification. Nice?, not really, but if your description is fitting and accurate, well....if the shoe fits, wear it.


I would not recommend leaving a nominal bequest to someone you wish to disinherit unless your lawyer recommends doing so. Leaving someone anything, even just a dollar, makes that person into a beneficiary, and beneficiaries have rights. Those rights vary from state to state, but it is possible that a $1 beneficiary would be entitled to notices of probate milestones, private information about the estate's assets, regular accountings, the ability to object to the executor's actions, etc. A beneficiary of a $1 bequest might be able to force the executor to do extra work and delay the distribution of the estate. Plus, the information about the estate's assets can give the $1 beneficiary ammunition to use against your intended beneficiaries.

I second all the recommendations to hire an attorney for an estate of this size. The problem posed by the OP is a common one, and an attorney who specializes in estate planning will know how to address it.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby smackboy1 » Thu Dec 20, 2012 11:56 am

bankmaggot wrote:I heard that getting an attorney involved with my size of estate is not worth it. Most of it ~65% will be from life insurance and the rest in retirement/cash/savings.


I'm curious: what are the qualifications of the person(s) giving this advice and upon what logic was it based? Based on the OP the gross estate is at least $1 MM so the size of the life insurance is no less than $650K. An estate plan including wills, durable power of attorneys, advanced health care directives and an irrevocable life insurance trust (ILIT) could probably be set up for < 1% of the gross estate. I'm also pretty sure that the annual fee for Vanguard to assume the roles of trustee and investment manager will be < 1%/year (BTW this is quite a bargain in the world of corporate trustees).

https://personal.vanguard.com/us/whatwe ... vice/roles

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Re: Kids inherit Millions and surrounded by jackals (family)

Postby Default User BR » Thu Dec 20, 2012 3:58 pm

Grt2bOutdoors wrote:A will can be contested, so if for any reason you think "jackals" or "hyenas" are going to show up at probate, its best to throw in something along the lines of "for my relatives, xyz, 123, and bobby - a total sum of $15 in equal shares - but include language that basically states if they contest the will, they will not receive what was left for them and if you wish provide a reason as to why they were left a token amount - no sane surrogate court judge is going to disagree with you if you have justification. Nice?, not really, but if your description is fitting and accurate, well....if the shoe fits, wear it.

I wouldn't worry about this. The chance of a successful challenge from non-primary beneficiaries is slight. One doesn't need to justify not leaving anything to cousins or uncles in that sort of case. Where you'd run into trouble is disinheriting a child or a spouse.


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Re: Kids inherit Millions and surrounded by jackals (family)

Postby umfundi » Thu Dec 20, 2012 11:00 pm

Make a list of all the things that should be done after you die. Your genealogy records, your unpublished book, ...

Then, do them yourself, now. You cannot will uncompensated obligations.

You should essentially leave your estate in equal amounts to your heirs. Unless there is a very good reason to do differently. In that event, you should get a good lawyer and a trust.

If you complicate it by trying to rule from the grave, the administrators and the lawyers will get the money, not your heirs.

Keith
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby mac808 » Fri Dec 21, 2012 12:21 am

Rather than dispersing lump sums at 25, 30, and 35, why not set up the trust to provide a life long stream of payments? This will force them to learn how to budget, will protect them from future gold diggers, divorce, etc. This is how I've set up similarly sized trusts for my own kids. If my 25 year old son started getting a check every month for $3k, I think that's wiser than just dumping the lump sum into his lap.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby livesoft » Fri Dec 21, 2012 12:29 am

If kids needed money to buy house, start a business, or pay for college a lump-sum would seem to be better than a stream.

If I was worried about my kids getting a lump sum, I would start teaching them now how to deal with it.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby TheGreyingDuke » Fri Dec 21, 2012 8:58 pm

livesoft wrote:If kids needed money to buy house, start a business, or pay for college a lump-sum would seem to be better than a stream.

If I was worried about my kids getting a lump sum, I would start teaching them now how to deal with it.


+1 :sharebeer

I have been through a similar scenario, in-laws died, left a good sum to three grandchildren, one was ours, the others belong to my wife's brother. Children were all in mid-20's to early 30's. My son schooled, in correct thinking, received all his in one lump sum and put it in his four fund Vanguard account, while the others are tangled up in expensive trusts at Fidelity. OK, different strokes and all, but there was an issue as the Brother-in-law was upset with us when our son had immediate access, thought it would make his children feel "untrusted", what!

Teach them when they are young, it is a life long gift.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby BolderBoy » Sun Dec 23, 2012 2:00 am

Grt2bOutdoors wrote:
A will can be contested, so if for any reason you think "jackals" or "hyenas" are going to show up at probate, its best to throw in something along the lines of "for my relatives, xyz, 123, and bobby - a total sum of $15 in equal shares - but include language that basically states if they contest the will, they will not receive what was left for them and if you wish provide a reason as to why they were left a token amount - no sane surrogate court judge is going to disagree with you if you have justification. Nice?, not really, but if your description is fitting and accurate, well....if the shoe fits, wear it.


If you have such exclusionary language be sure to spell out specifically what becomes of any forfeited proceeds else a judge will be left hanging and may boot the clause.
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Re: Kids inherit Millions and surrounded by jackals (family)

Postby bsteiner » Sun Dec 23, 2012 10:51 am

In response to bankmaggot: we wouldn't mandate distributions at a specified age or ages such as 35. That will throw the child's inheritance into his/her estate for estate tax purposes, and expose the inheritance to the child's potential creditors, including spouses. Instead of mandating distribution, we have our clients give the child effective control over his/her trust at the point when the trust would have otherwise ended. For this purpose, control means that, at that point, the child can become a trustee, can remove and replace his/her co-trustee (provided the replacement trustee is not a close relative or subordinate employee), and can appoint (give) money out of the trust to anyone he/she wants (except the child or his or her estate or creditors).

In resopnse to mac808: we would refine the trust you described to have the distributions be discretionary. A child might need more money at some point, or at some point might not want any distributions.

In response to TheGraying Duke: you're not limited to choosing between an outright distribution or an expensive trust. You could have a flexible trust that's not expensive. The child could be a trustee, with a family member who might not charge trustee's commissions as co-trustee, and they could invest the money in low-cost Vanguard funds. For example, since your grandchild is the financially savvy one in the family, each cousin (if appropriate) could have been a trustee of his/her own trust, together with your grandchild as co-trustee. Your grandchild could decide whether to take or waive his trustee's commissions.
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