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

[Anonymous]

Anonymous wrote:As someone who went to college on financial aid, loans, student jobs and SSA death benefits...are the multimillionaire trust fund parents aware of how little the death benefits can be? And you expect guardians to support your kids on that? Mine paid for food and modest incidentals like tampons and movies in college.

Who are you reading as suggesting that guardians are going to support kids on SSA benefits alone?

Do you know what the HEMS standard being discussed here is? https://emilyhickslaw.com/understanding-hems-examples-of-health-education-maintenance-and-support-in-trust-distributions/

[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.

This does not mention HEMS.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Trustee (a professional, not family) can disburse what they see fit at any point; kid is entitled to half of what is there at 30 and the other half at 40.

Those professional trustees take a large payoff for their work.

It's 1% of AUM. Since I have never used a professional to manage investments, I saved plenty on the front end.

https://fhtrust.com

What’s 1% on an $8,000,000 trust for 15 years?

Parents die when kid is 30.

Over a 15 year period (if kid gets remainder at 45), that 1%

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Trustee (a professional, not family) can disburse what they see fit at any point; kid is entitled to half of what is there at 30 and the other half at 40.

Those professional trustees take a large payoff for their work.

It's 1% of AUM. Since I have never used a professional to manage investments, I saved plenty on the front end.

https://fhtrust.com

What’s 1% on an $8,000,000 trust for 15 years?

Parents die when kid is 30.

Over a 15 year period (if kid gets remainder at 45), that 1%

Kid gets half at 30 and half at 40. Our use case for this plan is that we die when the kid is not 30, but 18. Someone else needs to manage the money at that age, and we have no family we would want to do it.

1% of AUM for that interval seems like a small price to pay for not putting the entire sum in the hands of an 18 year old.

Trusts can be changed. If the kid is past 18 and responsible (say 30, as in your example), we could change the terms. This is the plan for now, when kid is 12.

I sure do appreciate your concern for us, though, and hope you're directing the same scrutiny to the people involved in managing your money, if there are any.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Trustee (a professional, not family) can disburse what they see fit at any point; kid is entitled to half of what is there at 30 and the other half at 40.

Those professional trustees take a large payoff for their work.

It's 1% of AUM. Since I have never used a professional to manage investments, I saved plenty on the front end.

https://fhtrust.com

What’s 1% on an $8,000,000 trust for 15 years?

Parents die when kid is 30.

Over a 15 year period (if kid gets remainder at 45), that 1%

Kid gets half at 30 and half at 40. Our use case for this plan is that we die when the kid is not 30, but 18. Someone else needs to manage the money at that age, and we have no family we would want to do it.

1% of AUM for that interval seems like a small price to pay for not putting the entire sum in the hands of an 18 year old.

Trusts can be changed. If the kid is past 18 and responsible (say 30, as in your example), we could change the terms. This is the plan for now, when kid is 12.

I sure do appreciate your concern for us, though, and hope you're directing the same scrutiny to the people involved in managing your money, if there are any.

Testy! It would have been okay to say: yeah, it IS a lot of money being thrown away even in years the money manager makes no distributions and over 10 years, it’s like throwing away 10% of our kid’s inheritance. We don’t have another option that will work, though.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Trustee (a professional, not family) can disburse what they see fit at any point; kid is entitled to half of what is there at 30 and the other half at 40.

Those professional trustees take a large payoff for their work.

It's 1% of AUM. Since I have never used a professional to manage investments, I saved plenty on the front end.

https://fhtrust.com

What’s 1% on an $8,000,000 trust for 15 years?

Parents die when kid is 30.

Over a 15 year period (if kid gets remainder at 45), that 1%

Kid gets half at 30 and half at 40. Our use case for this plan is that we die when the kid is not 30, but 18. Someone else needs to manage the money at that age, and we have no family we would want to do it.

1% of AUM for that interval seems like a small price to pay for not putting the entire sum in the hands of an 18 year old.

Trusts can be changed. If the kid is past 18 and responsible (say 30, as in your example), we could change the terms. This is the plan for now, when kid is 12.

I sure do appreciate your concern for us, though, and hope you're directing the same scrutiny to the people involved in managing your money, if there are any.

Testy! It would have been okay to say: yeah, it IS a lot of money being thrown away even in years the money manager makes no distributions and over 10 years, it’s like throwing away 10% of our kid’s inheritance. We don’t have another option that will work, though.

It also would have been okay for you to have asked questions about any of that before weighing in with unasked-for advice.

But you didn’t do that, so I felt no obligation to moderate my response to you.

[Anonymous]

I only have about $1m to give per kid, and my sibling is the executor, and I want them off the hook as soon as possible so my kids would get full access in their twenties. I hope I raised them to be good decision-makers.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Trustee (a professional, not family) can disburse what they see fit at any point; kid is entitled to half of what is there at 30 and the other half at 40.

Those professional trustees take a large payoff for their work.

It's 1% of AUM. Since I have never used a professional to manage investments, I saved plenty on the front end.

https://fhtrust.com

What’s 1% on an $8,000,000 trust for 15 years?

Parents die when kid is 30.

Over a 15 year period (if kid gets remainder at 45), that 1%

Kid gets half at 30 and half at 40. Our use case for this plan is that we die when the kid is not 30, but 18. Someone else needs to manage the money at that age, and we have no family we would want to do it.

1% of AUM for that interval seems like a small price to pay for not putting the entire sum in the hands of an 18 year old.

Trusts can be changed. If the kid is past 18 and responsible (say 30, as in your example), we could change the terms. This is the plan for now, when kid is 12.

I sure do appreciate your concern for us, though, and hope you're directing the same scrutiny to the people involved in managing your money, if there are any.

Testy! It would have been okay to say: yeah, it IS a lot of money being thrown away even in years the money manager makes no distributions and over 10 years, it’s like throwing away 10% of our kid’s inheritance. We don’t have another option that will work, though.

It also would have been okay for you to have asked questions about any of that before weighing in with unasked-for advice.

But you didn’t do that, so I felt no obligation to moderate my response to you.

The info was for everyone, not you alone. It’s the weekend- try and relax a little.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Trustee (a professional, not family) can disburse what they see fit at any point; kid is entitled to half of what is there at 30 and the other half at 40.

Those professional trustees take a large payoff for their work.

It's 1% of AUM. Since I have never used a professional to manage investments, I saved plenty on the front end.

https://fhtrust.com

What’s 1% on an $8,000,000 trust for 15 years?

Parents die when kid is 30.

Over a 15 year period (if kid gets remainder at 45), that 1%

Kid gets half at 30 and half at 40. Our use case for this plan is that we die when the kid is not 30, but 18. Someone else needs to manage the money at that age, and we have no family we would want to do it.

1% of AUM for that interval seems like a small price to pay for not putting the entire sum in the hands of an 18 year old.

Trusts can be changed. If the kid is past 18 and responsible (say 30, as in your example), we could change the terms. This is the plan for now, when kid is 12.

I sure do appreciate your concern for us, though, and hope you're directing the same scrutiny to the people involved in managing your money, if there are any.

Testy! It would have been okay to say: yeah, it IS a lot of money being thrown away even in years the money manager makes no distributions and over 10 years, it’s like throwing away 10% of our kid’s inheritance. We don’t have another option that will work, though.

It also would have been okay for you to have asked questions about any of that before weighing in with unasked-for advice.

But you didn’t do that, so I felt no obligation to moderate my response to you.

The info was for everyone, not you alone. It’s the weekend- try and relax a little.

Your commitment to the unasked-for advice bit is notable!

[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.

Is there a therapy fund written into the trust? Your kids will need it for the money-control dynamic you and your husband wielded in life and then from the grave. This is insane.

When I read 55. 😳

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Trustee (a professional, not family) can disburse what they see fit at any point; kid is entitled to half of what is there at 30 and the other half at 40.

Those professional trustees take a large payoff for their work.

It's 1% of AUM. Since I have never used a professional to manage investments, I saved plenty on the front end.

https://fhtrust.com

What’s 1% on an $8,000,000 trust for 15 years?

Parents die when kid is 30.

Over a 15 year period (if kid gets remainder at 45), that 1%

Kid gets half at 30 and half at 40. Our use case for this plan is that we die when the kid is not 30, but 18. Someone else needs to manage the money at that age, and we have no family we would want to do it.

1% of AUM for that interval seems like a small price to pay for not putting the entire sum in the hands of an 18 year old.

Trusts can be changed. If the kid is past 18 and responsible (say 30, as in your example), we could change the terms. This is the plan for now, when kid is 12.

I sure do appreciate your concern for us, though, and hope you're directing the same scrutiny to the people involved in managing your money, if there are any.

Testy! It would have been okay to say: yeah, it IS a lot of money being thrown away even in years the money manager makes no distributions and over 10 years, it’s like throwing away 10% of our kid’s inheritance. We don’t have another option that will work, though.

It also would have been okay for you to have asked questions about any of that before weighing in with unasked-for advice.

But you didn’t do that, so I felt no obligation to moderate my response to you.

The info was for everyone, not you alone. It’s the weekend- try and relax a little.

Your commitment to the unasked-for advice bit is notable!

I repeat: try and relax a little.

[Anonymous]

Anonymous wrote:we have appointed executor and a back up and they are to use a HEMS type guide for spending from the trust before disbursements.

Inheritance is 1/3 at 25; 1/3 at 30 and 1/3 at 35. those are not subject to HEMS. there is a clause allowing the trustee to withhold if child is at significant risk of mismanaging assets due to drugs or signgifiant mental health, and directs that money should be spent on their behalf for their care.

If you are leaving a large amount of money there are better ways than a testamentary trust. You would need a marital deduction trust and generation skipping trusts are the safest way to keep the money in the family.

You’ll probably still be around when your kids are those ages so that type of trust wouldn’t be helpful although I guess you would update your plan.

[Anonymous]

What you want is pretty standard. Don't overthink it. An experienced atty will know what to do.

[Anonymous]

Anonymous wrote:This is actually a good thread. I have elementary-aged kids and a trust already established. I need to work on the incentive provisions though, so reading ideas is really helpful.

Incentive provisions are obnoxious and insulting. You only see those in the movies. You’ve raised your kids, what you’re trying to do is called dead hand control. You still want to control your kids after you’re gone. It’s not a good idea.

[Anonymous]

Anonymous wrote:I only have about $1m to give per kid, and my sibling is the executor, and I want them off the hook as soon as possible so my kids would get full access in their twenties. I hope I raised them to be good decision-makers.

+1. These trusts with all the rules and strings attached are a pain for everyone. At some point you have to let it go and trust your kid.