Does guardian have access to estate to support kids?

[Anonymous]

Kirstin Gulling is a lawyer who does wills and estates for families in the College Park area and has been recommended to us. We're planning to use her for our own just as soon as we figure out who we want as a guardian.

[Anonymous]

Anonymous wrote:

Anonymous wrote:14:24 here.

Please consider getting life insurance for yourself--think about what it would cost for DH to hire a nanny, housekeeper, etc for every year until DC goes away to college. Also, DH may want to take a sabbatical from work for a few months, so the insurance would help to cover expenses.

eh, most widowers with young kids are remarried within 2 years, so you needn't overestimate. Of course, you need to think about your dh spending all your kids' college money on his 2nd family, not sure what you can do to prevent that.

A good attorney can do a lot to prevent that through trusts. Ours did but she was nowhere near $500 (more like $3500). She actually brought up that we should both want a trust in place for just that reason.

Also totally agree with PP who said OP needs life insurance to cover her family if something were to happen to her. In addition to the points PP made, OP's DH might need to work a reduced schedule and/or put career growth on hold while he takes care of the children's needs.

[Anonymous]

Anonymous wrote:

Anonymous wrote:14:24 here.

Please consider getting life insurance for yourself--think about what it would cost for DH to hire a nanny, housekeeper, etc for every year until DC goes away to college. Also, DH may want to take a sabbatical from work for a few months, so the insurance would help to cover expenses.

eh, most widowers with young kids are remarried within 2 years, so you needn't overestimate. Of course, you need to think about your dh spending all your kids' college money on his 2nd family, not sure what you can do to prevent that.

Preventing the "misuse" of the funds is what a trust and the trustee are for. You chose a trustee - like your own dad or mom - who decides what money gets doled out for the Guardian (in this case, the husband) for what expenses.

This is exactly why I met with my attorney today to set up my trust. Don't want my ex husband getting his hands on all my life insurance, going to the Bahamas, buying a boat, or building an addition to house his new girlfriend's two kids.

[Anonymous]

OP again - thanks for the rec on Kirstin Gulling, 15:56.

To those who have created a trust for their assets - I am curious how much of an estate you would be leaving. I had the impression that it wasn't really necessary unless you had a pretty significant estate. Wondering also if funds from a life insurance policy roll into said trust if you both die?

I know that I should consult an attorney about these questions and am looking into it - just looking for some perspective here. Thanks.

[Anonymous]

Anonymous wrote:OP again - thanks for the rec on Kirstin Gulling, 15:56.

To those who have created a trust for their assets - I am curious how much of an estate you would be leaving. I had the impression that it wasn't really necessary unless you had a pretty significant estate. Wondering also if funds from a life insurance policy roll into said trust if you both die?

I know that I should consult an attorney about these questions and am looking into it - just looking for some perspective here. Thanks.

I'm going to create a trust, my net assets are approx. 800K. OP, you designate a beneficiary on your life insurance forms. The money goes to that person. So you could designate whoever/whatever you choose, including a trust set up for your kids I'd guess.

[Anonymous]

You can designate the kids as the beneficiaries of your life insurance, and indicate a manager of the assets for them (it doesn't have to be their father/mother if you are divorced). You could also do this if you're not divorced, but it seems odd to me to not just trust your spouse with the insurance after you're gone. I would be really insulted if my husband left his life insurance to a trust rather than to me directly, or even to the kids unless we agreed together that the money would specifically be set aside for their college or something like that. He'll be dead, I'll be raising my kids!

[Anonymous]

OP again - my husband's life insurance policy would go to me if he died, to the kids if we both died - the reason I ask is that the $ from the policy would make up the bulk of the $ that would go to the kids if we both died. Right now I think our retirement accounts are about $200K, we have about $60K in bank accounts, and maybe $15 K in other stocks. His life ins. policy is about 1 million, and we owe about $220K on our home. No other debts.

So I was thinking we don't really have enough in assets to warrant creating a trust. That's why I was wondering how the life insurance money would play into it, since it would be a lot more than the other assets.

[Anonymous]

So PP's - you would trust someone to raise your kids, but you are worried they would squander your (their) money? For us the money (mostly life insurance) would go into a trust for the kids, with the trustee being the same as the guardian (my parents for now - they are young - and we'll change it to my sister when she gets a little older.) Kids get full access to the money upon graduating college or turning 30.

[Anonymous]

Anonymous wrote:OP again - my husband's life insurance policy would go to me if he died, to the kids if we both died - the reason I ask is that the $ from the policy would make up the bulk of the $ that would go to the kids if we both died. Right now I think our retirement accounts are about $200K, we have about $60K in bank accounts, and maybe $15 K in other stocks. His life ins. policy is about 1 million, and we owe about $220K on our home. No other debts.

So I was thinking we don't really have enough in assets to warrant creating a trust. That's why I was wondering how the life insurance money would play into it, since it would be a lot more than the other assets.

There are many different reasons for trusts. One is to avoid probate. That's the process of resolving a will. Doesn't matter how much the estate is worth, using a trust avoids probate, which can be a long process even if no one is arguing. Another reason is to keep money safe (i.e., from greedy ex-husbands or irresponsible kids). To the PP talking about keeping $ safe from husband's second wife/kids, there is a special kind of trust for that, too (QTIP trust - pays income to spouse, but principle to kids so twinkie wife doesn't get it)!

So OP, to answer your questions: life insurance proceeds do not go through probate, so you wouldn't need a trust for that purpose, but you can put the proceeds in trust for your kids if you dont want them inheriting a lot of $ when they're young (or have that as an alternative in the event you and DH die together).

Finally, this probably doesn't matter in your circumstances, but a PP queried why you would leave life insurance proceeds to kids rather than DH. If you have enough $ to exceed the estate tax exemption, you should consider it. Example: estate tax exemption in DC is $1M (I think that's right). Collective assets are $800k, and you have $500k in life insurance. If DH is beneficiary, there is no estate tax when you die, but when he dies there is because total is $1.3M. If you leave insurance to kids, he will have no estate tax because assets are <$1M.

By the way, take this as an advertisement for going to a specialized lawyer - I learned all this going through the process last year.

[Anonymous]

11:31 here, meant to add that you might also want a trust to keep the other assets out of probate.

[Anonymous]

Anonymous wrote:
Finally, this probably doesn't matter in your circumstances, but a PP queried why you would leave life insurance proceeds to kids rather than DH. If you have enough $ to exceed the estate tax exemption, you should consider it. Example: estate tax exemption in DC is $1M (I think that's right). Collective assets are $800k, and you have $500k in life insurance. If DH is beneficiary, there is no estate tax when you die, but when he dies there is because total is $1.3M. If you leave insurance to kids, he will have no estate tax because assets are <$1M.

I don't think this is accurate. IIRC, if you buy the policy then it's part of your estate regardless of who is the beneficiary (the only way around that is to set up an irrevocable life insurance trust, but that may not be worthwhile).

[Anonymous]

OP again - this is clearly a complex topic.

Anybody know how long an estate is usually in probate if nobody is contesting anything, and whether there are generally significant costs to the probate process?

11:31, thanks for taking the time to share your thoughts. I hope when you say that you learned as you went through this process last year that you mean setting up your estate with a lawyer, and not that you lost a spouse!

[Anonymous]

I'm married to an estate attorney who has been in the business a long time. I don't think finding someone in this area for $500 is realistic, unless you have no assets. If you do find someone for this price, they probably aren't very good and are not familiar with long range tax planning.

[Anonymous]

Anonymous wrote:OP again - this is clearly a complex topic.

Anybody know how long an estate is usually in probate if nobody is contesting anything, and whether there are generally significant costs to the probate process?

11:31, thanks for taking the time to share your thoughts. I hope when you say that you learned as you went through this process last year that you mean setting up your estate with a lawyer, and not that you lost a spouse!

Take this as a cautionary tale: My father did his own will using some over the counter software. (One of the reasons he wanted to create a will was to prevent or minimize a known dispute over disposition/use of certain property among certain siblings.) He completed the program, filled everything out, printed and went to third party vendor to get properly notarized. A few years later he dies. Turns out that the will was not valid in the jurisdiction in which he was living. When I consulted an estate attorney, she told me that they saw that problem all the time. People thought a notary was sufficient (I guess it is in some states), but for that state is was not. There was some additional hoop required which he did not do. There was some state court procedure that we could go through to basically "prove up" the will, but it was going to be expensive. So essentially, it was as if he died without a will. (And of course the dispute he was hoping to avoid was not avoided.)

[Anonymous]

Anonymous wrote:

Anonymous wrote:
Finally, this probably doesn't matter in your circumstances, but a PP queried why you would leave life insurance proceeds to kids rather than DH. If you have enough $ to exceed the estate tax exemption, you should consider it. Example: estate tax exemption in DC is $1M (I think that's right). Collective assets are $800k, and you have $500k in life insurance. If DH is beneficiary, there is no estate tax when you die, but when he dies there is because total is $1.3M. If you leave insurance to kids, he will have no estate tax because assets are <$1M.

I don't think this is accurate. IIRC, if you buy the policy then it's part of your estate regardless of who is the beneficiary (the only way around that is to set up an irrevocable life insurance trust, but that may not be worthwhile).

Yes, but that's not inconsistent with my point. If you leave your insurance and whatever else to your husband (generally half your combined assets), unless he spends it all, he owns it when he dies. So it is possible that the life insurance proceeds he gets when you die, which become cash in his account, along with all of the assets you owned together. So his estate when he dies is over the threshold. If you have enough money that this may be an issue, you probably want to think about leaving life insurance directly to your kids, so it doesn't have to pass through your husband's estate to ultimately get to them.