Estate Planning ~ Ages and Stages

[Anonymous]

Advice needed:
I am creating a trust for my kids to be administered by family. The lawyer suggests an "ages and stages" approach where they would get percentages of the assets as young adults and at age 35, they would get access to the whole trust. That seems late. What is the typical age kids manage their own inheritance from a parent? My kids are still young (7th and 4th) but they smart and responsible. Does 27 make more sense?

TIA

[Anonymous]

You can put provisions in for housing, etc. or yes, lower the ages.

[Anonymous]

PP, we have them as co-trustees, with a family member, until 30.

[Anonymous]

My DH got a chunk at 35, 40 and 45. Smart and responsible in 4th and 7th grade is great, but the idea is to give them enough time try to live independently without counting on the family money. Believe me, large amounts of money can seriously dampen ambition. But that doesn’t necessarily matter to everyone.

[Anonymous]

I think stages is right. I think ours is 25, 30, 35. That doesn't mean they don't get access to some of the money before those ages. I assume you will have provisions that will allow withdraws for education and other legitimate expenses. Unless your trust will be so big they can live off of it forever you want to make sure that they get launched and established on their own.

[Anonymous]

Oh gosh no 35 is not late at all.

I do think they should be their own trustees by age 30.

But that is different from being able to access all of the trust.

I have a trust and I am the trustee, and I am only allowed to access it for my own health, education, maintenance, and support. For the rest of my life. I can't just take money out. The reason is to protect the money from creditors.

[Anonymous]

If they aren’t responsible at 30 they aren’t going to be responsible at 35 or 40.

[Anonymous]

I would encourage you to explore this question outside of DCUM if you are going to be leaving them large inheritances that will or could be life changing. There are a number of asset managers that have lots of literature on this topic, so ask if you’re with a private bank or if you work with a family office.

As someone who is thinking about this for my own kids, these are factors that I am considering:

- How much exposure will they have had to this type of wealth prior to reaching the age at which they will inherit the bulk of their assets
-Do you want them to have an established career before they get access to the assets
-Do you want them to receive it before/after marriage or does that not matter
-Do you want the assets to be used for particular expenses or do you have a POV on the function of the trust
-Do you want the trust to support future generations

Personally,
-I wouldn’t base the decision on how responsible a child seemed at 10 or 13
-35 is young to access all assets in a trust completely unrestricted

[Anonymous]

Anonymous wrote:If they aren’t responsible at 30 they aren’t going to be responsible at 35 or 40.

Generally you can expect more responsibility with every decade.

[Anonymous]

Anonymous wrote:My DH got a chunk at 35, 40 and 45. Smart and responsible in 4th and 7th grade is great, but the idea is to give them enough time try to live independently without counting on the family money. Believe me, large amounts of money can seriously dampen ambition. But that doesn’t necessarily matter to everyone.

+1

[Anonymous]

Anonymous wrote:Oh gosh no 35 is not late at all.

I do think they should be their own trustees by age 30.

But that is different from being able to access all of the trust.

I have a trust and I am the trustee, and I am only allowed to access it for my own health, education, maintenance, and support. For the rest of my life. I can't just take money out. The reason is to protect the money from creditors.

If you create a legacy trust for your child, you can use the money, but still protect it from creditors no matter your age.

[Anonymous]

Anonymous wrote:If they aren’t responsible at 30 they aren’t going to be responsible at 35 or 40.

This.

[Anonymous]

Anonymous wrote:If they aren’t responsible at 30 they aren’t going to be responsible at 35 or 40.

True, but this ignores the question of disincentivizing the heirs. If they know they'll receive substantial assets earlier in life, will that deter them from pursuing their own wealth through challenging and meaningful employment or entrepreneurship, simply marking time until an expected windfall? Even an otherwise responsible person may reasonably be less motivated to pursue professional success and accomplishment, if that matters to your and your values, if they know they need not plan for their own long-term financial security.

Many trusts are designed not to provide for complete financial independence at an early age, but to meter distributions to just make heirs' lives more comfortable and secure, without being a total substitute for the heirs' own efforts, drive, and ambitions.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If they aren’t responsible at 30 they aren’t going to be responsible at 35 or 40.

True, but this ignores the question of disincentivizing the heirs. If they know they'll receive substantial assets earlier in life, will that deter them from pursuing their own wealth through challenging and meaningful employment or entrepreneurship, simply marking time until an expected windfall? Even an otherwise responsible person may reasonably be less motivated to pursue professional success and accomplishment, if that matters to your and your values, if they know they need not plan for their own long-term financial security.

Many trusts are designed not to provide for complete financial independence at an early age, but to meter distributions to just make heirs' lives more comfortable and secure, without being a total substitute for the heirs' own efforts, drive, and ambitions.

Are you asking if my kids are gambling if I die young? Odd. Most kids can do the math.

[Anonymous]

[quote=Anonymous][quote=Anonymous]If they aren’t responsible at 30 they aren’t going to be responsible at 35 or 40. [/quote]

True, but this ignores the question of disincentivizing the heirs. If they know they'll receive substantial assets earlier in life, will that deter them from pursuing their own wealth through challenging and meaningful employment or entrepreneurship, simply marking time until an expected windfall? Even an otherwise responsible person may reasonably be less motivated to pursue professional success and accomplishment, if that matters to your and your values, if they know they need not plan for their own long-term financial security.

Many trusts are designed not to provide for complete financial independence at an early age, but to meter distributions to just make heirs' lives more comfortable and secure, without being a total substitute for the heirs' own efforts, drive, and ambitions. [/quote]

Well put!