Bequeathing to Wife - Up to a point

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dumbbunny
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Bequeathing to Wife - Up to a point

Post by dumbbunny »

I have revised my will two times since the original was written. Each time was with the help of a lawyer. I'm ok with paying fees to know that my wishes will be valid. Once again I am revising my will but I would like to throw it out to you Bogleheads for your ideas. I would rather bounce off ideas with you (for free) than brainstorm with a lawyer at $250/hour. If and when a good idea is designed, I will take it to my lawyer to discuss. I live in Oregon if that makes any difference.

I have no house or real estate. My net worth is all in stock, bonds and cash in taxable and tax-deferred accounts at Vanguard. With my current will, 90% of my wealth will pass on to my wife and 10% will go to my favorite charity. I have reconsidered giving her so much because quite frankly, I don't want it to be passed on her her two children (35 and 31 years old sons with families). My relationship with my stepchildren has never been good and as a matter of fact, the relationship between mother and children is not ideal.

Wife's money has always been her money and my money has alway been mine in our marriage. She is bequeathing her entire estate to her children.

How can I gift my wife with something but not have it pass on to her children?

Thanks
“It’s the curse of old men to realize that in the end we control nothing." "Homeland" episode, "Gerontion"
oxothuk
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Re: Bequeathing to Wife - Up to a point

Post by oxothuk »

Peterjens wrote:How can I gift my wife with something but not have it pass on to her children?
Thanks
You could specify that she receive the proceeds as an SPIA.

Of course, she could still give the annuity proceeds to her children (while she is alive), but that would be subject to gift tax limits.
letsgobobby
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Re: Bequeathing to Wife - Up to a point

Post by letsgobobby »

You would leave it in a trust with wife and another as co-trustees. Wife can use income to support self, and withdraw principal if approved by co-trustee. When she dies, the proceeds go to your charity.

Stepchildren get nothing.

I'm not a lawyer.
hale2
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Re: Bequeathing to Wife - Up to a point

Post by hale2 »

It sounds like you could benefit from setting up a QTIP trust for at least some of your assets. Your wife will get the income from the trust. When she dies the assets are then distributed to the remainder beneficiaries that you designated when you created the trust. In your case it sounds like they would go to charity.
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Re: Bequeathing to Wife - Up to a point

Post by Gill »

That's what a trust is for. You're the perfect candidate.
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earlyout
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Re: Bequeathing to Wife - Up to a point

Post by earlyout »

You would probably want to include something in the trust that would make it difficult for your wife to just gift a lot of cash from the trust to her children while she is still alive. I suppose this could get tricky but your lawyer should be able to help. Picking a very reliable trustee is critical to see that the terms of the trust are followed.
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Nuvoletta
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Re: Bequeathing to Wife - Up to a point

Post by Nuvoletta »

Without knowing the specific vehicle, this sounds like what my grandfather did for my grandmother. He set up a trust that provided my grandmother an annuity throughout her lifetime, then the principal went to his alma mater after her death. We all knew it was happening and were grateful that he had ensured she was taken care of. My impression was that the trustee was neither my grandmother nor the school itself directly.
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Re: Bequeathing to Wife - Up to a point

Post by dumbbunny »

earlyout wrote:You would probably want to include something in the trust that would make it difficult for your wife to just gift a lot of cash from the trust to her children while she is still alive. I suppose this could get tricky but your lawyer should be able to help. Picking a very reliable trustee is critical to see that the terms of the trust are followed.
My wife and I began discussion on my concern of leaving money to her brood and she understood my position. I trust her and I think she would not take advantage of my gift but heck, she could remarry and then I would be funding that relationship. :oops:

Thanks oxothuk - the above is along the same lines.
Thanks letsgobobby, Gill, nuvoletta. You ideas are encouraging.
Thanks hale2 - I'm going to bird dog QTIPS.
“It’s the curse of old men to realize that in the end we control nothing." "Homeland" episode, "Gerontion"
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Re: Bequeathing to Wife - Up to a point

Post by Grt2bOutdoors »

Peterjens wrote:
earlyout wrote:You would probably want to include something in the trust that would make it difficult for your wife to just gift a lot of cash from the trust to her children while she is still alive. I suppose this could get tricky but your lawyer should be able to help. Picking a very reliable trustee is critical to see that the terms of the trust are followed.
My wife and I began discussion on my concern of leaving money to her brood and she understood my position. I trust her and I think she would not take advantage of my gift but heck, she could remarry and then I would be funding that relationship. :oops:

Thanks oxothuk - the above is along the same lines.
Thanks letsgobobby, Gill, nuvoletta. You ideas are encouraging.
Thanks hale2 - I'm going to bird dog QTIPS.
You could dictate from the grave - have the trust pay out income contigent upon her not getting remarried, but that doesn't prevent her from having other types of relationships.
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Re: Bequeathing to Wife - Up to a point

Post by surfstar »

[OT comment removed by admin LadyGeek]

;)
Calm Man
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Re: Bequeathing to Wife - Up to a point

Post by Calm Man »

Once you are dead, she will get anything she can to then eventually, and certainly after death as that is her intent. It is hard for me to udnerstand how you happily have her give you nothing, but you give it all to her. I guess I had a similar thing with an ex wife who became an ex wife. It seems reflective of a certain entitled type of person (I know you are going to tell me you have more). But to make sure the kids do not get anything, a trust is one way or a single premium annuity with no subsequent benefit. The latter will really stick it to the kids and take maximal care of her.
freddie
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Re: Bequeathing to Wife - Up to a point

Post by freddie »

Well she could die first and then she could be funding your next relationship:) I also would like to think my wife would remarry and take that guy's kids inheritance for my kids:) With stepkids while your alive it is a clear issue. Expecting the wife to get the prenup after your dead isn't really something I have thought about:) Coming up with good trust terms (i.e. control from the grave) is very hard when you want to a) insure your loved one has the cash they need b) they don't spend the cash on stuff you don't approve of.
Peterjens wrote:
earlyout wrote:You would probably want to include something in the trust that would make it difficult for your wife to just gift a lot of cash from the trust to her children while she is still alive. I suppose this could get tricky but your lawyer should be able to help. Picking a very reliable trustee is critical to see that the terms of the trust are followed.
My wife and I began discussion on my concern of leaving money to her brood and she understood my position. I trust her and I think she would not take advantage of my gift but heck, she could remarry and then I would be funding that relationship. :oops:

Thanks oxothuk - the above is along the same lines.
Thanks letsgobobby, Gill, nuvoletta. You ideas are encouraging.
Thanks hale2 - I'm going to bird dog QTIPS.
suming
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Re: Bequeathing to Wife - Up to a point

Post by suming »

Or she would need to marry someone for his money when you die.
island
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Re: Bequeathing to Wife - Up to a point

Post by island »

If your $ has always been yours during the marriage and hers hers why change anything after death?

She plans to leave all of hers to her children and that's apparently ok with you, so why not leave all of yours to charity or do the split in reverse? 10% to her and 90% to charity. Not saying stiff your wife, especially if she doesn't have enough to live comfortably on her own $, but apparently she does now. I assume you split some expenses now? What % is that?

Much easier for me to understand the yours and mine after death when step kids are involved than it is to grasp how married couples make that work when alive!
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Re: Bequeathing to Wife - Up to a point

Post by dumbbunny »

Calm Man wrote:It is hard for me to udnerstand how you happily have her give you nothing, but you give it all to her.
I have no problem with her giving her wealth to her kids and leaving none to me. It's her money. I don't want to give all my wealth to her but I do want to give her some. I could give her one amount and it might appear to be a token or I could a larger amount but then it might end up going to her kids. That is why I would like to have some kind of trust to control it. I have made a lot of sacrifices to achieve the wealth and don't want it squandered.
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Re: Bequeathing to Wife - Up to a point

Post by dumbbunny »

Grt2bOutdoors wrote:You could dictate from the grave - have the trust pay out income contigent upon her not getting remarried, but that doesn't prevent her from having other types of relationships.
Yes that is a possibility, too. Drats! The idea of giving her a small amount without any strings attached might be the answer.
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Re: Bequeathing to Wife - Up to a point

Post by rec7 »

Peterjens wrote:
Calm Man wrote:It is hard for me to udnerstand how you happily have her give you nothing, but you give it all to her.
I have no problem with her giving her wealth to her kids and leaving none to me. It's her money. I don't want to give all my wealth to her but I do want to give her some. I could give her one amount and it might appear to be a token or I could a larger amount but then it might end up going to her kids. That is why I would like to have some kind of trust to control it. I have made a lot of sacrifices to achieve the wealth and don't want it squandered.
Decide what amount you can live with that will be squandered then leave the rest to your church. An annuity is ok but how much do you love insurance companies? I like the first idea better. Remember an insurance company might win that bet and how would you feel about that? This way seem more iron clad than a trust but I am not a lawyer.
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Re: Bequeathing to Wife - Up to a point

Post by dumbbunny »

freddie wrote:Well she could die first and then she could be funding your next relationship :)
That's a thought. And it reminds me she will be getting my spousal social security so that is some of my wealth. No wonder she's asking me to hold off applying for it.
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Re: Bequeathing to Wife - Up to a point

Post by dumbbunny »

island wrote:If your $ has always been yours during the marriage and hers hers why change anything after death?
Good point. As I said in another post. I do want to give her something.
island wrote:She plans to leave all of hers to her children and that's apparently ok with you, so why not leave all of yours to charity or do the split in reverse? 10% to her and 90% to charity. Not saying stiff your wife, especially if she doesn't have enough to live comfortably on her own $, but apparently she does now. I assume you split some expenses now? What % is that?
I sort of like the idea of the reverse split. We split only groceries and utilities. She owns the house and I pay rent (long story).
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island
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Re: Bequeathing to Wife - Up to a point

Post by island »

Peterjens wrote:
freddie wrote:Well she could die first and then she could be funding your next relationship :)
That's a thought. And it reminds me she will be getting my spousal social security so that is some of my wealth. No wonder she's asking me to hold off applying for it.
Sounds like you don't trust your wife and suspect ulterior motives regarding you social security. Have you asked her directly why she want you to hold off?
Also have you talked to her about your strong desire that your $ does not trickle down to her children?

I don't know your ages obviously, but you might want to consider spending some or giving to charity now rather than dying with a pile left behind. Like you said you worked hard for it so you should enjoy it rather than worry what happens to it from the grave. However I do have that thought myself at times when I contemplate what to do with our hard earned funds if any is left behind. It will go to each other, but after the last spouse? Not sure yet. Still have a bit to go for retirement and hopefully a lot more til death, but you never know!

I look forward to hearing your solution.
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Re: Bequeathing to Wife - Up to a point

Post by dumbbunny »

island wrote:
Peterjens wrote:
freddie wrote:Well she could die first and then she could be funding your next relationship :)
That's a thought. And it reminds me she will be getting my spousal social security so that is some of my wealth. No wonder she's asking me to hold off applying for it.
Sounds like you don't trust your wife and suspect ulterior motives regarding you social security. Have you asked her directly why she want you to hold off?
Also have you talked to her about your strong desire that your $ does not trickle down to her children?
I do trust my wife and don't suspect ulterior motives. I should have included a smile emoticon. I am 60 and DW is 62. I can hold off receiving SS payment and am working with Vanguard on a strategy. My DW and I have touched on the subject of me not bequeathing to her sons but not on an action level. And she doesn't expect me to bequeath to her sons. My issue is how to give to my wife without any excess going to her sons.

So it looks like I have a couple of options - a QTIP or a nominal amount with no strings. She can supplement my gift with my Social Security.

Thanks.
Last edited by dumbbunny on Tue May 13, 2014 10:12 pm, edited 1 time in total.
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island
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Re: Bequeathing to Wife - Up to a point

Post by island »

Peterjens wrote:
island wrote:
Peterjens wrote:
freddie wrote:Well she could die first and then she could be funding your next relationship :)
That's a thought. And it reminds me she will be getting my spousal social security so that is some of my wealth. No wonder she's asking me to hold off applying for it.
Sounds like you don't trust your wife and suspect ulterior motives regarding you social security. Have you asked her directly why she want you to hold off?
Also have you talked to her about your strong desire that your $ does not trickle down to her children?
I do trust my wife and don't suspect ulterior motives. I should have included a smile emoticon. I am 60 and DW is 62. I can hold off receiving SS payment and am working with Vanguard on a strategy. My DW and I have touched on the subject of me not bequeathing to her sons but not on an action level. And she doesn't expect me to do so. My issue is how to give to my wife without any excess going to her sons.

So it looks like I have a couple of options - a QTIP or a nominal amount with no strings. She can supplement my gift with my Social Security.

Thanks.
Funny when I wrote that I was going to add I don't see a smiley face! Happy to know you were joking.
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Re: Bequeathing to Wife - Up to a point

Post by dumbbunny »

Any ideas if the State of Oregon requires a spouse to bequeath a minimum amount to the surviving spouse?
Thanks.
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Professor Emeritus
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Re: Bequeathing to Wife - Up to a point

Post by Professor Emeritus »

Take a look at charitable remainder trusts
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Re: Bequeathing to Wife - Up to a point

Post by bluemarlin08 »

A QTIP for all or a portion of the estate seems appropriate. What if she needs long term care for a number of years and never remarried, the QTIP could provide the necessary funds.
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Re: Bequeathing to Wife - Up to a point

Post by harrylime »

Peterjens wrote:Any ideas if the State of Oregon requires a spouse to bequeath a minimum amount to the surviving spouse?
Thanks.
With the way that you phrased the question - "... requires a spouse to bequeath a minimum amount ... " - the answer would be "No."

However, as in most states, the surviving spouse may choose to take an elective share of the estate.

http://www.oregonlaws.org/ors/114.600


For additional info, you could do a search with terms like: oregon elective share surviving spouse
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Re: Bequeathing to Wife - Up to a point

Post by dumbbunny »

Prof. Emeritus, bluemarlin08, and harrylime,
Thanks for your responses. This is all going to save me time when the lawyer starts his meter.
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Re: Bequeathing to Wife - Up to a point

Post by Meg77 »

Sounds like you have your answer - this is a very common and very easy problem to fix. Any estate planning attorney can help you set up a simple trust (there are various kinds that could work for you), and you can dictate that your wife can take out X amount a year, or Y% of the balance, or interest but not principal. Or, certain trust types limit distributions to what is necessary for "health, education, maintenance or support," which would be up the trustee to discern beyond what you put in writing.

Hopefully you both live for decades yet to come, but in any event keep in mind that she is likely to outlive you by a decade or more. It may feel like you are leaving her a big pile (and maybe you are), but when you convert that pile of assets into a conservative annual income stream, it may be a lot less than you or she thinks at the end of the day - especially if that pile dwindles as you start to live on it prior to your death. It sounds like she has a lot less money than you do, and I am betting your social security check won't exactly be enough to enable her to live high on the hog and also spoil her sons - with whom she isn't even close to by the sounds of it. Point being, I wouldn't worry about her squandering anything, as she may need all your money and then some to fund what could be a long stint in assisted living and/or a nursing home.
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Re: Bequeathing to Wife - Up to a point

Post by northwoods1 »

You might want to look into a Charitable Gift Annuity, which assures annuity income while the beneficiary is alive and after the beneficiary's death, the remainder goes to the charitable organization. Most colleges and other charitable organizations have offices to deal with these and will help you set one up. They seem quite simple and foolproof and appear to accomplish what you desire. They pay out somewhat less than a regular annuity, thus guaranteeing that significant funds will be left to the charitable organization. Search for "American Council on Gift Annuities - Charitable Gift Annuities" for detailed information.
My DH is has similar concerns to yours, and he will probably address them through a CGA.
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Re: Bequeathing to Wife - Up to a point

Post by dumbbunny »

northwoods1 wrote:My DH is has similar concerns to yours, and he will probably address them through a CGA.
It's assuring to know that I'm not the only one with this concern. I didn't want to come across as control-freak because I am not. I love my wife and want to gift her "up to a point."

Meg77- I am considering a trust designed for long-term care only until death and then the rest goes to charity. That plus my social security should be beneficial to her. DW will be receiving an inheritance in the near (statistically) future - her mom is 97 - and that will be beneficial, too.

I have deep gratitude for everyone who posted on this forum. It has brought clarity, direction and most importantly a sense of peace on a very personal and sensitive topic.
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