Updating wills - when do they need to be more complicated?

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James1
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Updating wills - when do they need to be more complicated?

Post by James1 » Sat Jul 28, 2018 12:22 pm

We have very simple wills that are ~7 yrs old. They leave 100% to the spouse and if something happens to both of us, everything is split between the 2 kids (and appoints a guardian for them). That was fine when our assets were small, but now they would each inherit mid 6 figures + 1/2 the life insurance payouts. At what point should we consider other options for our wills and what would they be? We want to keep it simple, but we also worry about their long term financial health if they inherit a large sum so young.
:sharebeer

RadAudit
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Re: Updating wills - when do they need to be more complicated?

Post by RadAudit » Sat Jul 28, 2018 12:32 pm

James1 wrote:
Sat Jul 28, 2018 12:22 pm
we also worry about their long term financial health if they inherit a large sum so young.
We went to a will that transferred things to a trust when one of the kids was in her first marriage (could see what would happen next from a long ways off) and both of our kids were under 30.
FI is the best revenge. LBYM. Invest the rest. Stay the course. - PS: The calvary isn't coming, kids. You are on your own.

Katietsu
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Re: Updating wills - when do they need to be more complicated?

Post by Katietsu » Sat Jul 28, 2018 12:33 pm

If the kids are young enough to need guardians, then you should be creating a trust. I recognize your concern about the kids getting access to significant funds at a young age, ie 18 or 21. But, possibly the bigger issue is what happens before that age. If you do not set up parameters for the management of the inheritance, the courts will.

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dm200
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Re: Updating wills - when do they need to be more complicated?

Post by dm200 » Sat Jul 28, 2018 12:53 pm

When our child(ren) were young - and we had or anticipated higher level of assets - we did wills with testamentary trusts.

tibbitts
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Re: Updating wills - when do they need to be more complicated?

Post by tibbitts » Sat Jul 28, 2018 2:19 pm

I (think) people are suggesting a will that creates a trust, not necessarily creating and funding a trust now

James1
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Re: Updating wills - when do they need to be more complicated?

Post by James1 » Sat Jul 28, 2018 2:28 pm

After doing some quick reading, it looks like a testamentary trust would be the best/simplest solution. If we don't create one, how do the courts decide what happens with the funds for minor children?

How do you decide when the trust will give the kids the funds? It appears you can make it as simple or complex as you want.

delamer
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Re: Updating wills - when do they need to be more complicated?

Post by delamer » Sat Jul 28, 2018 2:46 pm

James1 wrote:
Sat Jul 28, 2018 2:28 pm
After doing some quick reading, it looks like a testamentary trust would be the best/simplest solution. If we don't create one, how do the courts decide what happens with the funds for minor children?

How do you decide when the trust will give the kids the funds? It appears you can make it as simple or complex as you want.
So your current will does not provide for the money to go into trust for the kids if they are minors?

I am surprised that a competent attorney would not have set up testamentary trusts under the will for minor children.

The testamentary trusts created by our wills distribute a portion of the money to our kids at various ages, with the trustee able to distribute money sooner for other purposes like a home purchase.

James1
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Re: Updating wills - when do they need to be more complicated?

Post by James1 » Sat Jul 28, 2018 3:17 pm

delamer wrote:
Sat Jul 28, 2018 2:46 pm
James1 wrote:
Sat Jul 28, 2018 2:28 pm
After doing some quick reading, it looks like a testamentary trust would be the best/simplest solution. If we don't create one, how do the courts decide what happens with the funds for minor children?

How do you decide when the trust will give the kids the funds? It appears you can make it as simple or complex as you want.
So your current will does not provide for the money to go into trust for the kids if they are minors?

I am surprised that a competent attorney would not have set up testamentary trusts under the will for minor children.

The testamentary trusts created by our wills distribute a portion of the money to our kids at various ages, with the trustee able to distribute money sooner for other purposes like a home purchase.
No. Our current will provides a guardian for the kids and another relative to manage any assets until they reach a certain age (I don't remember what age though -18?). We were young when it was created and were primarily concerned with naming a guardian for them. There were few assets to worry about. I haven't thought about our will for years, but a recent death in the family has brought it into my thoughts. I have a lot to learn and think about apparently. When looking at our assets now (thanks to the advice on this forum!), I'm not sure I would want the kids to have access to all of it at 18.

Dottie57
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Re: Updating wills - when do they need to be more complicated?

Post by Dottie57 » Sat Jul 28, 2018 3:38 pm

I had a friend with several kids. Their will specifically provided money for improvements to the guardians house if the parents died. I think it is a good idea to help the guardians in this regard.

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dm200
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Re: Updating wills - when do they need to be more complicated?

Post by dm200 » Sat Jul 28, 2018 3:49 pm

Our child is now nearing 40 - so no longer an issue.

However, when he was young - there were no readily apparent guardians in case DW and I died. So, we put nothing about that in our wills. We dod do testamentary trusts, though, so he would be financially provided for.

We decided that in the unlikely event of our deaths, the families would figure it out. The two likely candidates were my brother (wife and children) and my wife's sister (husband and children)

delamer
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Re: Updating wills - when do they need to be more complicated?

Post by delamer » Sat Jul 28, 2018 5:07 pm

James1 wrote:
Sat Jul 28, 2018 3:17 pm
delamer wrote:
Sat Jul 28, 2018 2:46 pm
James1 wrote:
Sat Jul 28, 2018 2:28 pm
After doing some quick reading, it looks like a testamentary trust would be the best/simplest solution. If we don't create one, how do the courts decide what happens with the funds for minor children?

How do you decide when the trust will give the kids the funds? It appears you can make it as simple or complex as you want.
So your current will does not provide for the money to go into trust for the kids if they are minors?

I am surprised that a competent attorney would not have set up testamentary trusts under the will for minor children.

The testamentary trusts created by our wills distribute a portion of the money to our kids at various ages, with the trustee able to distribute money sooner for other purposes like a home purchase.
No. Our current will provides a guardian for the kids and another relative to manage any assets until they reach a certain age (I don't remember what age though -18?). We were young when it was created and were primarily concerned with naming a guardian for them. There were few assets to worry about. I haven't thought about our will for years, but a recent death in the family has brought it into my thoughts. I have a lot to learn and think about apparently. When looking at our assets now (thanks to the advice on this forum!), I'm not sure I would want the kids to have access to all of it at 18.
I’d go forward with what you’ve started, but have the money go into trust for the kids using the same relative as trustee. There are many options for giving the kids access to their inheritance, both gradually and/or as needed according to life events.

Find a good estate attorney and discuss those options with her/him. There is no one right answer on disbursing the money; everything has tradeoffs.

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Re: Updating wills - when do they need to be more complicated?

Post by bsteiner » Sat Jul 28, 2018 7:55 pm

James1 wrote:
Sat Jul 28, 2018 2:28 pm
After doing some quick reading, it looks like a testamentary trust would be the best/simplest solution. If we don't create one, how do the courts decide what happens with the funds for minor children?
...
A properly drafted Will would say that if any property passes to a minor, the executors may distribute it to a custodian (any adult person) for the minor under the Uniform Transfers to Minors Act.
delamer wrote:
Sat Jul 28, 2018 2:46 pm
James1 wrote:
Sat Jul 28, 2018 2:28 pm
After doing some quick reading, it looks like a testamentary trust would be the best/simplest solution. If we don't create one, how do the courts decide what happens with the funds for minor children?

How do you decide when the trust will give the kids the funds? It appears you can make it as simple or complex as you want.
So your current will does not provide for the money to go into trust for the kids if they are minors?

I am surprised that a competent attorney would not have set up testamentary trusts under the will for minor children.

The testamentary trusts created by our wills distribute a portion of the money to our kids at various ages, with the trustee able to distribute money sooner for other purposes like a home purchase.
No one suggested the attorney was competent.

Better than mandating distributions at a specified age is to provide that upon reaching that age the child gets to control his/her trust. That will keep the inheritance out of the child's estate, and protect it against the child's creditors and spouses.

Rosa
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Re: Updating wills - when do they need to be more complicated?

Post by Rosa » Sun Jul 29, 2018 7:48 pm

HI, I don't know about making a Will more complicated, but if your children are sensible creatures, you could instruct in your Will that in case both parents pass they should receive each, half of the estate when they both reach 21 years of age (or older if you estimate it's better).

bsteiner
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Re: Updating wills - when do they need to be more complicated?

Post by bsteiner » Sun Jul 29, 2018 7:50 pm

Rosa wrote:
Sun Jul 29, 2018 7:48 pm
HI, I don't know about making a Will more complicated, but if your children are sensible creatures, you could instruct in your Will that in case both parents pass they should receive each, half of the estate when they both reach 21 years of age (or older if you estimate it's better).
What if a child gets divorced, outlives his/her spouse and remarries, does well and has a taxable estate, has a creditor problem, or goes into a nursing home and wants Medicaid?

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