Testimentory trust for minor children - what terms would you put on it?

[Anonymous]

Anonymous wrote:After seeing first hand how difficult it can be to find a trustee, we give control our kids control of their own trusts/inheritance at age 30. It isn't worth it for a family member to be in control of a trust that they don't benefit from because it is a lot of work. I'd do it for minor kids but there is no way that I'd want to do it for grown nieces/nephews or other family members. Doing it for a friend would be even worse. Institutional trustees seem great but we've really had trouble with them.

We were curious about this option too. Question for the crowd: did you do this? If so, at what age? We're there any restrictions?

[Anonymous]

Anonymous wrote:We have some kids still in elementary school and some who have graduated college so our needs may be different than yours.

Basically, the trusts are governed by an executor. There are payouts at staggered stages from 18 to 55, in incremental amounts with stipulations about use (or nonuse) of the funds). Each increment is predicated on the success (we spell out the criteria) in managing the prior increment. We also tried to build in some safeguards to help our kids avoid gold-diggers or people (strangers, friends, relatives) with sticky fingers.

If one of us dies, the other cannot change the trust or will.

If a beneficiary contests the will, that person immediately loses all funds that have been paid or will be paid and is no longer a beneficiary of our will/trusts. My husband has actually told our executor that he wants a "scorched earth" attitude about anyone who contests. We are being more than fair and equal. We cannot imagine a scenario in our current status that would cause anyone to contest, but we also realize that life happens.

We have been very clear to the kids because we want them to give the warning to anyone who gets involved with them - do NOT plan on benefitting from our will because our kids' hands are tied so go do your gold-digging elsewhere.

I’m curious what state you are in and how this is worded w.r.t. contesting

Are you contributing towards your children’s college, graduate/professional school and/or first home expenses?

[Anonymous]

We give our kids full control at age 27 or 28 (can't remember which) before that a trustee has control and money can be used for education (college is already covered by 529) or a down payment. I wanted to keep money in trustee's control for longer but my husband disagreed plus it is a lot to ask of the trustee so we compromised on the age. If DH and I died tomorrow, there would be a ~$6M estate not including 529s but some of that money would be used to cover expenses as my kids grew up.

[Anonymous]

I was old enough to manage my money and there was no reason not to trust my kid at the same age.

I like this

[Anonymous]

Anonymous wrote:Your lawyer should be answering this. HEMS is standard. You’ll void yourself using too much precatory bs.

Lawyers on these forums hate it when you free source advice (of course, they are all over the place asking for free investment and relationship advice).

[Anonymous]

Anonymous wrote:Ours would probably be about the size of OP’s, maybe a bit larger, and IIRC we basically provided for support education, down payment, marriage and then chunks to be disbursed along the way with everything done by 40 or 45.

I remember making the will and thinking I was old enough to manage my money and there was no reason not to trust my kid at the same age.

OTOH I know a lawyer who I respect a lot who thinks trusts should never terminate because that way a child who gets married and divorced will keep that money separate. Maybe if we had more money we’d worry about that but I had no desire to make my kid deal with a trust for life in case they got a divorce.

Is this possible? Can a trust be set up such that the beneficiary is allowed to draw down money as specified but keep the rest of the assets in the Trust in perpetuity so it is separate from marital assets? Can a beneficiary of a trust also become the executor at a certain point in time?

[Anonymous]

Anonymous wrote:These are the exact sort of things where I love to crowd source ideas. Saves the money from paying so called experts.

My trusts are already set up and I still read these posts and find the responses other than yours helpful.

[Anonymous]

Anonymous wrote:Our trusts provided support for our child until the age of majority. Thereafter, it provided for an income equal to the amount the child earned from employment, with a very modest floor amount payable to prevent actual destitution regardless. The idea was to encourage gainful employment - earn more, receive more from the trust. Don't work, or barely work, and the trust will ensure the child didn't actually starve, but would not fund a comfortable life as a dilettante. The trust paid out lump sums at specified intervals as the child aged, so the incentive was limited to relatively early, formative years. There were provisions to change the trust's payout structure in the event of the child's disability which prevented gainful employment, and the trustees were also empowered to fund the starting of a business if backed by a well-conceived and thought-out business plan.

Spouse and I thought through this and did the opposite. We aren't going to try to control our kids lives. There are 2 payouts fairly early. We've spent a lot of time working with them on financial responsibility.

[Anonymous]

One idea I read about is to have the trust only pay out income (rather than any lump sum distribution) so it lasts long enough to get passed onto the next generation rather than having someone go blow it all. You can add conditions to it also- drug tests, graduate from college etc.

[Anonymous]

Anonymous wrote:After seeing first hand how difficult it can be to find a trustee, we give control our kids control of their own trusts/inheritance at age 30. It isn't worth it for a family member to be in control of a trust that they don't benefit from because it is a lot of work. I'd do it for minor kids but there is no way that I'd want to do it for grown nieces/nephews or other family members. Doing it for a friend would be even worse. Institutional trustees seem great but we've really had trouble with them.

This. We don't have a trustworthy trustee and won't deal with an institutional trustee. Kids are already old enough now not to need it.

[Anonymous]

Anonymous wrote:We're going to specify in our will that the assets left in our estate plus our life insurance payouts will find a trust for each of our minor children. We are talking about when the trust would provide funds. If you anticipated a million to a million and a quarter in each trust, what would you specify and why? Simple lump payout at a certain age? Payouts at multiple ages? Allow guardians to cover educational expenses? Something else?

Just curious what people's preferences or recommendations would be. Tips and experiences?

I am the named executor of a sibling's trust (single parent). The way it was setup, kids will get 4% each year of the what they inherit (will be about $2M each if that event happens today) until age 35 (Kids are 16 and 14 now), at which point they just the whole thing. There's a separate bucket of money for healthcare (insurance premium, etc. One of the kids has health issues; this bucket will be funded by Life insurance proceeds). College expenses, will be paid for over and above the 4%. Don't recall if the accounts just transfer over at age 35 or if the trust splits into two. As executor I'll have the liberty to invest the money as I deem fit as well as pay out additional amounts if appropriate..

OP - You are right in crowdsourcing ideas. We did extensive research when setting this up. The lawyer was good at telling us what will and won't work but did not offer any suggestions or recommendations on their own. Most of these estate planning gigs are for a fixed fee and the lawyer has every incentive to keep it as simple as possible. Even if it was T&M, why would you want to pay by the hour to blue sky options like these with a lawyer?

[Anonymous]

Anonymous wrote:

Anonymous wrote:These are the exact sort of things where I love to crowd source ideas. Saves the money from paying so called experts.

My trusts are already set up and I still read these posts and find the responses other than yours helpful.

Yet you will still employ an attorney to draft the document and do so accurately with advice based on your state's regulations.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:These are the exact sort of things where I love to crowd source ideas. Saves the money from paying so called experts.

My trusts are already set up and I still read these posts and find the responses other than yours helpful.

Yet you will still employ an attorney to draft the document and do so accurately with advice based on your state's regulations.

DP. Of course she will, since attorney mafia has made it next to impossible for someone to DIY even the simplest of things.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:These are the exact sort of things where I love to crowd source ideas. Saves the money from paying so called experts.

My trusts are already set up and I still read these posts and find the responses other than yours helpful.

Yet you will still employ an attorney to draft the document and do so accurately with advice based on your state's regulations.

Op again. What is your point? I've already got an attorney lined up. I'm not trying to avoid it. I'm just trying to show up with a clear idea of what we're asking, so that I don't waste anyone's time.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We have some kids still in elementary school and some who have graduated college so our needs may be different than yours.

Basically, the trusts are governed by an executor. There are payouts at staggered stages from 18 to 55, in incremental amounts with stipulations about use (or nonuse) of the funds). Each increment is predicated on the success (we spell out the criteria) in managing the prior increment. We also tried to build in some safeguards to help our kids avoid gold-diggers or people (strangers, friends, relatives) with sticky fingers.

If one of us dies, the other cannot change the trust or will.

If a beneficiary contests the will, that person immediately loses all funds that have been paid or will be paid and is no longer a beneficiary of our will/trusts. My husband has actually told our executor that he wants a "scorched earth" attitude about anyone who contests. We are being more than fair and equal. We cannot imagine a scenario in our current status that would cause anyone to contest, but we also realize that life happens.

We have been very clear to the kids because we want them to give the warning to anyone who gets involved with them - do NOT plan on benefitting from our will because our kids' hands are tied so go do your gold-digging elsewhere.

I’m curious what state you are in and how this is worded w.r.t. contesting

Are you contributing towards your children’s college, graduate/professional school and/or first home expenses?

I don't have the document handy so I would have to pull it out vis a vis the verbiage. We are in Virginia. A cousin in Maryland uses the same wording and we all got it from an uncle who set up his trusts in California. I will say that we had a fire lit under us all when we saw what happened to another relative when a son-in-law because unhappy with his allotment from his inlaws who died in the same car accident.

And, yes, there is a fund set aside, separate from each child's trust, that is used for general expenses (continue with the same nanny & housekeeper, housing, travel, K-12 education, college, post-grad college, some money for a wedding and a small/reasonable amount money for a down payment on a first home).