Options for wealth inheritance (difficulties expected)

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TetrisCollider
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Options for wealth inheritance (difficulties expected)

Post by TetrisCollider »

We (mid-50s) are reviewing our plans for a situation when our wealth will need to be passed on to our children – either in unexpected (emergency) circumstances or when our passing will come naturally (and anything in-between).

We have two adult children (both single at the moment) – one is very good with personal, financial and life decisions, the other one is not. At this time, relationship between them is broken and we are expecting it is not going to get better (same thing is true between us and the challenging child).

We do not want one of our children to be responsible for the other when we are not around (or are not capable). We currently have a Standard Will that essentially splits things 50/50, as well as our direct beneficiary setup for all our financial accounts. Our responsible child is currently listed as our Executor – we are trying to figure out the best way to remove this responsibility.

We have looked at setting up separate Trusts for each of them, setting up a Corporate Trustee/Executor and similar setups – each of these options of course represent a compromise of some sort.

If you have had to deal with a similar situation, I would appreciate any suggestions on options that we have not looked at, the pitfalls of each and outcomes of when this had to be executed/put in-place.
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Broken Man 1999
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Re: Options for wealth inheritance (difficulties expected)

Post by Broken Man 1999 »

While I would split the estate 50/50, I don't think I would put a corporate trustee in place for the responsible heir. For the responsible heir I would set them up to become trustee immediately.

For the irresponsible heir just use a corporate trustee.

So far as being executor, I wouldn't put the burden on the responsible heir, given the poor relations between family members.

What I would absolutely do is make your estate attorney aware of the family disunity.

A DD is executor to both our estates. Thankfully our heirs are very close with each other. However, I would immediately remove a DD if the relationship with her sister sours.

Plus our DDs have read our wills, so there will be no strife from our wills, as they are 50/50 once DW and I both pass. Other assets will pass immediately to DDs 50/50 to each DD branch.

Broken Man 1999
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TomatoTomahto
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Re: Options for wealth inheritance (difficulties expected)

Post by TomatoTomahto »

OP, kudos for treating your children equally; it might not occur during your lifetime, but it will be noted by the “not currently close” child.

We have some similar family dynamics, but also different. We made one of our children responsible for investing decisions for the trusts, but quite emphatically removed him from decisions about distributions.
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bltn
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Re: Options for wealth inheritance (difficulties expected)

Post by bltn »

I would consider setting up a spendthrift trust for at least part of the inheritance for the irresponsible son. Maybe for both. Maximum withdrawal rate 4% annually. At least have the irresponsible son s inheritance last for a while. Meanwhile he might learn how to take care of his finances.
Big Dog
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Re: Options for wealth inheritance (difficulties expected)

Post by Big Dog »

going thru something similar now. I have 4 adult sibs and most of us are estranged. But the 'rents named me as Trustee, so the other sibs have no choice but to speak with me. Most assets split pro-rata, so its not that difficult, and I used to do accounting so I keep audit-ready records. I will distribute the correct % to all, and the not-so-responsible sib will do with her share as she wants. She's an adult and can make her own life choices.

Quite frankly I'm glad to be Trustee even tho its a PIA. If not-so-reponsible sib was Trustee, I have no doubt that she would have emptied the accounts already.
SnowBog
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Re: Options for wealth inheritance (difficulties expected)

Post by SnowBog »

bltn wrote: Sun May 09, 2021 11:42 am I would consider setting up a spendthrift trust for at least part of the inheritance for the irresponsible son. Maybe for both. Maximum withdrawal rate 4% annually. At least have the irresponsible son s inheritance last for a while. Meanwhile he might learn how to take care of his finances.
Out of curiosity, can this be circumvented? For example, I've seen places offering to "buy out" monthly payments from lawsuits, lottery winnings, etc.

I've always wondered if someone irresponsible could "sell" what was likely a life long income stream from a trust for a "quick buck"... (And then fealt sad for them...) I realize they can't sell the trust or assets in the trust, but if the trust makes regular payments of $x (or x%) I'm afraid someone out there would offer them a cash payment for their rights/interest in such a scenario...

I have an elder sibling who is not responsible, and I'm concerned any inheritance they may receive (if any) will be blown through almost immediately. When I've raised it up to parents, their view is either "not their problem at that point [they'll be gone]." :(

Luckily we have no need/interest in the inheritance (if any), but I've thought about setting any we receive aside as I expect it would only be a matter of time before they burn through whatever they get and then come to myself and other sibling "for help". If it was possible to setup a trust like this that they couldn't "sell their future income"... Sadly I imagine we'll be looking at that in future years...
khram
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Re: Options for wealth inheritance (difficulties expected)

Post by khram »

I would do what you can to avoid drama once you're gone. I have no clue the specifics of your "challenging child." But I have 3 siblings and don't have good relationships with them, or even a great relationship with my father. And it will likely never get better. I think the 4 of them would probably blame me and consider me the "problem child," which doesn't make it correct ('why don't you just ignore all the ways they've mistreated you so our family can look good on the outside, they just treat you like that because they love you' essentially). However, I'm the one who makes more money, has made at least better career decisions.

Anyway, when my mom died unexpectedly (parents were divorced, so things were separate), one of my sisters handled everything, and she didn't try to cut me out of anything, but they were all complaining about every little penny, not getting as much as they had wanted, taxes, etc. Even small amounts of money will turn people very nasty. If it's a large sum of wealth, it *will* cause big problems.

Aside from that, I would have them both receive their inheritance over a long period of time and not just get a huge lump-sum check at once that can be wasted -- assuming it's a large inheritance. If it's modest, it probably doesn't matter too much.
delamer
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Re: Options for wealth inheritance (difficulties expected)

Post by delamer »

There are 2 issues.

One is the choice of executor, which is a temporary (and hopefully short-term) position until your estate is distributed. If you think challenging child will cause lots of problems for responsible child if responsible child is executor, then choose a 3rd party professional as executor and your estate will pay the fees. Your heirs will get a little less money, but it’s worth it.

Regarding the trusts, you could forgo them altogether and let your children inherit the assets directly. You also could set up different types of trusts for each child, with more restrictions on the challenging child. If challenging child is unhappy, then the blame accrues to you rather than responsible child.

From the executor’s pount of view, it’s never been clear to me how much explanation s/he owes the beneficiaries. As long as s/he follows the terms of the will, is there any obligation to tell one heir the details of what another heir receives, in what form, or with what restrictions?
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Lee_WSP
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Re: Options for wealth inheritance (difficulties expected)

Post by Lee_WSP »

What are you trying to accomplish?

Not sure I can give you great advice without knowing the goal.

If the estate is small, leaving it directly is going to cause the least amount of enmity and be simple to implement.

If the estate is large, it depends on what you ultimately want. You don't actually have to leave your children anything. Just putting it out there for consideration.
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TetrisCollider
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Re: Options for wealth inheritance (difficulties expected)

Post by TetrisCollider »

Thank you for all the responses so far.

- Yes, we did think about creating separate trusts. Of course this complicates things a bit as you'd have to maintain/adjust two trusts all the time.
- Agree that Corporate Trustee would be needed only for one trust (not both)
- We did think about a Spendthrift Trust for the financially challenging child, but as someone said in another post from a while ago: "Managing from the grave" might not turn out for the best. On the other hand, if we are gone tomorrow, the 50% would be life changing for the challenging child and we all know what happens when someone who does not know how to manage finances gets a windfall. Still thinking about this option...
- Removing the burden (decision and financial about the sibling) from the responsible child and avoiding (or at least minimizing) the drama is the top priority
- Thank you for those sharing what you are going through now (these life circumstances really suck)
- Interesting question from SnowBog about circumventing Spendthrift Trusts - I have to search the web. If services that give you money BEFORE you get your paycheck exist, I would imagine this exists as well
- The issue in my mind of identifying a 3rd party Executor is duration. We already had to make multiple updates/adjustments to our Will throughout our lifetime and have removed/changed many Executors based on life changes. I suppose this is unavoidable.
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Lee_WSP
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Re: Options for wealth inheritance (difficulties expected)

Post by Lee_WSP »

SnowBog wrote: Sun May 09, 2021 11:59 am
bltn wrote: Sun May 09, 2021 11:42 am I would consider setting up a spendthrift trust for at least part of the inheritance for the irresponsible son. Maybe for both. Maximum withdrawal rate 4% annually. At least have the irresponsible son s inheritance last for a while. Meanwhile he might learn how to take care of his finances.
Out of curiosity, can this be circumvented? For example, I've seen places offering to "buy out" monthly payments from lawsuits, lottery winnings, etc.
Only if the distributions are required and held to a numerical standard and no spendthrift provision is included. In other words, no.
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Re: Options for wealth inheritance (difficulties expected)

Post by bsteiner »

TetrisCollider wrote: Sun May 09, 2021 10:59 am We (mid-50s) are reviewing our plans for a situation when our wealth will need to be passed on to our children – either in unexpected (emergency) circumstances or when our passing will come naturally (and anything in-between).

We have two adult children (both single at the moment) – one is very good with personal, financial and life decisions, the other one is not. At this time, relationship between them is broken and we are expecting it is not going to get better (same thing is true between us and the challenging child).

We do not want one of our children to be responsible for the other when we are not around (or are not capable). We currently have a Standard Will that essentially splits things 50/50, as well as our direct beneficiary setup for all our financial accounts. Our responsible child is currently listed as our Executor – we are trying to figure out the best way to remove this responsibility.

We have looked at setting up separate Trusts for each of them, setting up a Corporate Trustee/Executor and similar setups – each of these options of course represent a compromise of some sort.

If you have had to deal with a similar situation, I would appreciate any suggestions on options that we have not looked at, the pitfalls of each and outcomes of when this had to be executed/put in-place.
I wouldn't call your Wills and beneficiary designations standard.

If you think having the responsible child as executor won't work, then you should pick some other individual(s) and/or a bank or trust company as executor.

Unless there's a reason not to do so, you could give the responsible child control over his/her trust. In other words, he/she could be a trustee, have the power to remove and replace his/her co-trustee (provided the replacement trustee isn't a close relative or subordinate employee0, and he could have the power to appoint (give or leave) the assets of his/her trust to anyone he/she wants (except himself/herself or his/her estate or creditors).

You'll have to decide how much, if any, control your other child should have, and who the trustees (or co-trustees with that child if he/she will be a trustee) will be.

You'll have to revoke the beneficiary designations except for your life insurance and retirement benefits.
TetrisCollider wrote: Sun May 09, 2021 2:40 pm ... we did think about creating separate trusts. Of course this complicates things a bit as you'd have to maintain/adjust two trusts all the time.
...
There's nothing for you to maintain or adjust. Upon the surviving spouse's death, the executor of the surviving spouse's estate (and the trustees of the trusts for the surviving spouse's benefit under the Will of the first spouse to die, if any) will divide the assets and distribute half to the trustees of Child A's trust and half to the trustees of Child B's trust. Thereafter, the trustees of each child's trust will administer that trust as appropriate, without regard to how the trustees of your other child's trust administer that trust.
Freetime76
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Re: Options for wealth inheritance (difficulties expected)

Post by Freetime76 »

TetrisCollider wrote: Sun May 09, 2021 2:40 pm Thank you for all the responses so far.

- Yes, we did think about creating separate trusts. Of course this complicates things a bit as you'd have to maintain/adjust two trusts all the time.
- Agree that Corporate Trustee would be needed only for one trust (not both)
- We did think about a Spendthrift Trust for the financially challenging child, but as someone said in another post from a while ago: "Managing from the grave" might not turn out for the best. On the other hand, if we are gone tomorrow, the 50% would be life changing for the challenging child and we all know what happens when someone who does not know how to manage finances gets a windfall. Still thinking about this option...
- Removing the burden (decision and financial about the sibling) from the responsible child and avoiding (or at least minimizing) the drama is the top priority
- Thank you for those sharing what you are going through now (these life circumstances really suck)
- Interesting question from SnowBog about circumventing Spendthrift Trusts - I have to search the web. If services that give you money BEFORE you get your paycheck exist, I would imagine this exists as well
- The issue in my mind of identifying a 3rd party Executor is duration. We already had to make multiple updates/adjustments to our Will throughout our lifetime and have removed/changed many Executors based on life changes. I suppose this is unavoidable.
It’s very kind that you are considering this in advance. Unless you get divorced (awkward, I know :oops: ) your kid will be executor once. I assume you or your spouse would serve (if even necessary at all) for the first to go.

Have you asked the responsible one (if they want to be your executor)? Some people like having a task to do and feel responsible for the service to you. Some would appreciate a 3rd party more. Not that it’s about them, by any means.

From my own experience, I appreciated when both my parents told all kids what was in the wills and who was executor...including updates. More recently, due to an issue with one kid who doesn’t know what’s in the updated will, I expect that the drama will ensue at some point. But the drama will ensue no matter what, so why worry about it?

Yes, the better managed wills I know of do get updated. You’re doing the right thing, imho! It seems, life changes, assets increase, income/expenses in retirement become known. Those I know of that have not updated (may) have a few gems brewing... it’s super fun when it predated marriage, children, step children and grandchildren.
bltn
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Re: Options for wealth inheritance (difficulties expected)

Post by bltn »

SnowBog wrote: Sun May 09, 2021 11:59 am
bltn wrote: Sun May 09, 2021 11:42 am I would consider setting up a spendthrift trust for at least part of the inheritance for the irresponsible son. Maybe for both. Maximum withdrawal rate 4% annually. At least have the irresponsible son s inheritance last for a while. Meanwhile he might learn how to take care of his finances.
Out of curiosity, can this be circumvented? For example, I've seen places offering to "buy out" monthly payments from lawsuits, lottery winnings, etc.

I've always wondered if someone irresponsible could "sell" what was likely a life long income stream from a trust for a "quick buck"... (And then fealt sad for them...) I realize they can't sell the trust or assets in the trust, but if the trust makes regular payments of $x (or x%) I'm afraid someone out there would offer them a cash payment for their rights/interest in such a scenario...

I have an elder sibling who is not responsible, and I'm concerned any inheritance they may receive (if any) will be blown through almost immediately. When I've raised it up to parents, their view is either "not their problem at that point [they'll be gone]." :(

Luckily we have no need/interest in the inheritance (if any), but I've thought about setting any we receive aside as I expect it would only be a matter of time before they burn through whatever they get and then come to myself and other sibling "for help". If it was possible to setup a trust like this that they couldn't "sell their future income"... Sadly I imagine we'll be looking at that in future years...
I ve never thought of being able to sell future trust disbursements as an income stream fo a lump sum. I would imagine the disbursements from an irrevocable trust would have to be made to the beneficiary, who would then be responsible for transferring them to the third party purchaser. Who would buy something like that?
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TetrisCollider
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Re: Options for wealth inheritance (difficulties expected)

Post by TetrisCollider »

Freetime76 wrote: Sun May 09, 2021 7:53 pm
...

Have you asked the responsible one (if they want to be your executor)? Some people like having a task to do and feel responsible for the service to you. Some would appreciate a 3rd party more. Not that it’s about them, by any means.

...
Actually both of them know that the responsible one is the Executor and the other child is fully aware of his financial challenges. Unfortunately the relationships are going in the negative direction, hence why we want to do everything we can to resolve what we know will happen before it does.
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Lee_WSP
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Re: Options for wealth inheritance (difficulties expected)

Post by Lee_WSP »

bltn wrote: Sun May 09, 2021 8:01 pm
SnowBog wrote: Sun May 09, 2021 11:59 am
bltn wrote: Sun May 09, 2021 11:42 am I would consider setting up a spendthrift trust for at least part of the inheritance for the irresponsible son. Maybe for both. Maximum withdrawal rate 4% annually. At least have the irresponsible son s inheritance last for a while. Meanwhile he might learn how to take care of his finances.
Out of curiosity, can this be circumvented? For example, I've seen places offering to "buy out" monthly payments from lawsuits, lottery winnings, etc.

I've always wondered if someone irresponsible could "sell" what was likely a life long income stream from a trust for a "quick buck"... (And then fealt sad for them...) I realize they can't sell the trust or assets in the trust, but if the trust makes regular payments of $x (or x%) I'm afraid someone out there would offer them a cash payment for their rights/interest in such a scenario...

I have an elder sibling who is not responsible, and I'm concerned any inheritance they may receive (if any) will be blown through almost immediately. When I've raised it up to parents, their view is either "not their problem at that point [they'll be gone]." :(

Luckily we have no need/interest in the inheritance (if any), but I've thought about setting any we receive aside as I expect it would only be a matter of time before they burn through whatever they get and then come to myself and other sibling "for help". If it was possible to setup a trust like this that they couldn't "sell their future income"... Sadly I imagine we'll be looking at that in future years...
I ve never thought of being able to sell future trust disbursements as an income stream fo a lump sum. I would imagine the disbursements from an irrevocable trust would have to be made to the beneficiary, who would then be responsible for transferring them to the third party purchaser. Who would buy something like that?
If structured as an annuity, anyone who buys annuities would buy such a trust. However, you typically include a spendthrift provision to prevent assignment of the rights to the trust.
Katietsu
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Re: Options for wealth inheritance (difficulties expected)

Post by Katietsu »

One issue that I observed with an extended family member. Because of a similar concern, he redid the will to use a law firm as the executor. They did nothing for many months. There were almost penalties for tax issues for missing deadlines but another member of the law firm stepped in. Because the executor law firm felt it their obligation to change the locks, the family could not even have any family photos or access their own items that they had lent to the deceased.

My thought at the time was whether you can you name a friend or family member as the executor but with the direction to use a named third party to carry out the duties? And have the friend or family member have the right to replace the named third party at their discretion? I know that does not take the executor completely out of it. But in many situations, it seems like that might be enough separation if used in conjunction with a detailed will and trust arrangement.
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Re: Options for wealth inheritance (difficulties expected)

Post by Lee_WSP »

The executor is typically empowered to hire any reasonable professionals reasonably necessary to help with closing the estate and billing the estate directly. The executor is more or less stepping into the shoes of the decedent and wrapping up their final affairs as well as dividing up the estate. As such, the executor may fire any professionals as well.

If a proposed executor does not wish to serve, he or she will simply decline and the estate moves on to the next choice.


In other words, there is no need, nor should you have a mechanism for replacing hired help. You'd just list the desired executors in order of preference. If you don't wish the law firm to serve, don't list them. You can nominate all the beneficiaries to serve as joint executors if desired as well.
Ranunculus
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Re: Options for wealth inheritance (difficulties expected)

Post by Ranunculus »

TetrisCollider wrote: Sun May 09, 2021 10:59 am We (mid-50s) are reviewing our plans for a situation when our wealth will need to be passed on to our children – either in unexpected (emergency) circumstances or when our passing will come naturally (and anything in-between).

We have two adult children (both single at the moment) – one is very good with personal, financial and life decisions, the other one is not. At this time, relationship between them is broken and we are expecting it is not going to get better (same thing is true between us and the challenging child).

We do not want one of our children to be responsible for the other when we are not around (or are not capable). We currently have a Standard Will that essentially splits things 50/50, as well as our direct beneficiary setup for all our financial accounts. Our responsible child is currently listed as our Executor – we are trying to figure out the best way to remove this responsibility.

We have looked at setting up separate Trusts for each of them, setting up a Corporate Trustee/Executor and similar setups – each of these options of course represent a compromise of some sort.

If you have had to deal with a similar situation, I would appreciate any suggestions on options that we have not looked at, the pitfalls of each and outcomes of when this had to be executed/put in-place.
You don’t mention mental illness or substance abuse, both of which make a spendthrift trust appropriate. People who are irresponsible but otherwise healthy have the capacity to learn from their mistakes, but someone who is addicted or unable to function due to mental illness needs protection from themselves.
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TetrisCollider
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Re: Options for wealth inheritance (difficulties expected)

Post by TetrisCollider »

Ranunculus wrote: Mon May 10, 2021 6:08 pm You don’t mention mental illness or substance abuse, both of which make a spendthrift trust appropriate. People who are irresponsible but otherwise healthy have the capacity to learn from their mistakes, but someone who is addicted or unable to function due to mental illness needs protection from themselves.
Appreciate your comment. Let's just say there are plenty of grey zones that fall between being fully functional and completely dysfunctional (for many different reasons - some explainable and some not).
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maxq
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Re: Options for wealth inheritance (difficulties expected)

Post by maxq »

I think the types of assets involved have to be considered in trying to plan ahead for this situation. POD accounts, 401k beneficiaries, etc are relatively simple and seem to just work mechanically without the estate or heirs being involved in the process (other than notifying the institution of death and receiving the funds as directed in the account documents). Other assets, particularly real estate, may be more problematic. Likewise the disposition of personal property, whether high value or merely sentimental. My cousin has a similar situation with her 3 adult kids, with one being responsible and the other two being deadbeats (her most charitable description to date). I look forward to following this thread and passing it on to her. :-)
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Re: Options for wealth inheritance (difficulties expected)

Post by spammagnet »

delamer wrote: Sun May 09, 2021 12:52 pm... From the executor’s pount of view, it’s never been clear to me how much explanation s/he owes the beneficiaries. As long as s/he follows the terms of the will, is there any obligation to tell one heir the details of what another heir receives, in what form, or with what restrictions?
IANAL. It's my impression that wills are public (at least to some extent) but trusts are not. If the will splits the estate equally to two different trusts, both see that the division of assets is fair. Beyond that, how each trust is structured does not have to be disclosed to the non-beneficiary heir.
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TetrisCollider
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Re: Options for wealth inheritance (difficulties expected)

Post by TetrisCollider »

maxq wrote: Mon May 10, 2021 8:09 pm I think the types of assets involved have to be considered in trying to plan ahead for this situation. POD accounts, 401k beneficiaries, etc are relatively simple and seem to just work mechanically without the estate or heirs being involved in the process (other than notifying the institution of death and receiving the funds as directed in the account documents). Other assets, particularly real estate, may be more problematic. Likewise the disposition of personal property, whether high value or merely sentimental. My cousin has a similar situation with her 3 adult kids, with one being responsible and the other two being deadbeats (her most charitable description to date). I look forward to following this thread and passing it on to her. :-)
Maxq, I agree with you that the type of financial asset is important to come up with the right plan - we've been mulling this over for quite a while. As we were researching Trusts, some explanations stated that if you don't want your Will probated, you first create a Trust and then you have to move ALL of your financial assets into the Trust(s) - if you leave ANY of the financial assets out of the Trust(s), you still have to probate your Will, so "what's the point". However, in our case, the purpose of the Trust(s) is not to avoid probate but to resolve the potential drama situation. Also, if you need to make POD accounts, brokerages, etc part of the Trust, you have to change documentation for every single one of them from a person to a Trust, which is a huge PITA if you have numerous accounts and every one of the financial institutions has their unique policy about this. That is what I meant in my earlier response that you have to maintain the Trusts - if you are constantly making changes to your financial accounts. So we are thinking that just purely doing a 50/50 split on the Beneficiaries in these accounts will accomplish the fairness and we just have to name a 3rd party executor to resolve the issue of one child blaming the other during the Will Execution process.

Regarding Real Estate, which you so rightly identified as a challenge - we resolved this challenge by selling our house. No more ownership issues. :)
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MarkerFM
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Re: Options for wealth inheritance (difficulties expected)

Post by MarkerFM »

TetrisCollider wrote: Mon May 10, 2021 9:04 pm
Maxq, I agree with you that the type of financial asset is important to come up with the right plan - we've been mulling this over for quite a while. As we were researching Trusts, some explanations stated that if you don't want your Will probated, you first create a Trust and then you have to move ALL of your financial assets into the Trust(s) - if you leave ANY of the financial assets out of the Trust(s), you still have to probate your Will, so "what's the point". However, in our case, the purpose of the Trust(s) is not to avoid probate but to resolve the potential drama situation. Also, if you need to make POD accounts, brokerages, etc part of the Trust, you have to change documentation for every single one of them from a person to a Trust, which is a huge PITA if you have numerous accounts and every one of the financial institutions has their unique policy about this. That is what I meant in my earlier response that you have to maintain the Trusts - if you are constantly making changes to your financial accounts. So we are thinking that just purely doing a 50/50 split on the Beneficiaries in these accounts will accomplish the fairness and we just have to name a 3rd party executor to resolve the issue of one child blaming the other during the Will Execution process.

Regarding Real Estate, which you so rightly identified as a challenge - we resolved this challenge by selling our house. No more ownership issues. :)
If you have that many financial accounts, it might be time to think about consolidating them, this will simplify everything later. Changing account ownership to a trust is not difficult. Once you do that, you can modify the trust if you want by amendment or complete restatement. You needn't change the name of the trust and therefore don't need to change ownership of any accounts again.
Nowizard
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Re: Options for wealth inheritance (difficulties expected)

Post by Nowizard »

Condolences for the estrangement from the two children, first. It does appear that you are focusing on the pragmatic issues rather than what must be difficult emotionally, and avoiding what would be a reaction by some to be punitive. There are two issues with emotionality, the estrangement and the always present dealing with end-of-life decisions. If the responsible party either has a relationship with his sibling or can be reliably depended upon to execute a will according to its contents, then the most direct approach would be to keep him as the Executor or Successor Trustee. Complicated issue that can change. At your ages changes could always result in changes to the will, so this could be an evolving decision rather than one made once. As an aside, we have a Trust. Funding it does require detail, but it is relatively simple to title new acquisitions appropriately.

Tim
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Watty
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Re: Options for wealth inheritance (difficulties expected)

Post by Watty »

One thing that may not have been mentioned yet is that with the strief that is going on you also need to consider how your funds will be handled while you are still alive if you are not able to manage them yourself. For example if one of you lives to be 95 and is in a nursing home then often a child would take care of your finances and making decisions about your care. This could be an issue if the challenging child wants to get involved or if your responsable child is not able to do this for you.

I don't have a good suggestion about what you should do but it would be good to add this to your list of things to consider.

If I was in your situation then I would also give a lot of thought about you could do in your will for the challenging childs kids(your grandkids) since they may also be dealing with a difficult parent and at least a somewhat dysfunctional home. I obviously do not know the details of the situation but in some cases it might be reasonable to leave part of the estate to the grandkids instead of your kid. If you have enough money then helping them with college costs could also help them become independent of their parent.

Having money in a trust to support your challenging kid when they are older would also help your grandkids since they would not have to help support an elderly parent who cannot support themself because they squandered their inheritance.
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Meg77
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Re: Options for wealth inheritance (difficulties expected)

Post by Meg77 »

TetrisCollider wrote: Mon May 10, 2021 9:04 pm
However, in our case, the purpose of the Trust(s) is not to avoid probate but to resolve the potential drama situation.

So we are thinking that just purely doing a 50/50 split on the Beneficiaries in these accounts will accomplish the fairness and we just have to name a 3rd party executor to resolve the issue of one child blaming the other during the Will Execution process.
I don't think a trust is going to help your kids avoid any drama, and neither is a third party executor. For one thing, their relationship is already frayed so there is not much to lose there. But if you are simply dividing all your assets evenly between your two kids, there is nothing to argue about or blame anybody for. Even if there was, you can avoid that by being honest about how you're leaving your assets with both kids before you die. Executors don't get to make ANY decisions - they simply EXECUTE your will. Surely both your children can be told that and understand it. It sounds like your will and assets will be very simple to execute and divide, especially since you won't even have a home to sell. That is certainly something your responsible child can do for you, and probably a whole lot faster and cheaper than trying to find a third party - though of course if you have someone you trust who is young enough to do it, that will work fine too.
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