Financial planning when you know you'll be inheriting a trust

[Anonymous]

HHI of around 140K with a toddler. Right now, dad stays home with the baby (some side income from consulting, but not his priority right now). Our income covers our needs but not much left over at the end of the day. We're in the process of looking at preschools and realizing tuition is going to require one adjustments. Intention is for dad to go back to working full time, but give current political environment, unclear how quickly that would happen.

Right now we save some for retirement, but not a ton. 10% of my gross automatically goes to a 401k (employer benefit). I don't add anything else right now. We add $2500 each to Roth's for both of us each year. At 30 and 35 we have about $180k in various retirement accounts right now.

We're not doing a 529 for the baby as her grandparents on both sides have started one for her and we expect through that college will end up fully paid for.

With that context, here's my question. I know we're behind with retirement. We just have no flexibility and will have even less when the baby goes to preschool... BUT I know I have a trust fund coming to me one my parents are gone (hopefully in many many years). I have no idea how much is in there but know it's probably at least $1M (each for my sister and me left to us by our grandparents).

How worried do I need to be about retirement given this? Should we work to get our budget down to save more for retirement or are we ok given the trust?

Should we prioritize saving for my husband in the off chance we would separate? We have a prenup detailing that the trust is mine so I don't want to leave him in a lurch... thoughts?

[Anonymous]

If the trust fund was in your name, why do you have to wait until your parents die?

[Anonymous]

Anonymous wrote:If the trust fund was in your name, why do you have to wait until your parents die?

It's set up so that my dad is the executor until he dies; he can give me access to funds if I need them now (to buy a house for instance), but we won't control the money until he's gone.

[Anonymous]

Relying on others will set you up to fail. Over the next decade a lot can change financial for people so your trust or promise of college can be gone. You should never count on that money. One prolonged illness in a parent can wipe that all out quickly.

[Anonymous]

Counting on an inheritance is a bad plan. Is it truly a trust, already set up in your name? If it was and you had clear details of it, I'd assume you'd have more clarity on the amount. Plus you'd be able to have access to it sooner.

Is it THEIR trust? And you will inherit it?

So much can happen with that money between now and then, given long term care expenses, medical expenses in end of life, etc. If it's not already in your name, it isn't yours to count on, and that's the only way I can responsibly give you advice.

SO given that, then yes - time for dad to go back to work full time and save like you're not getting the money.

[Anonymous]

Anonymous wrote:

Anonymous wrote:If the trust fund was in your name, why do you have to wait until your parents die?

It's set up so that my dad is the executor until he dies; he can give me access to funds if I need them now (to buy a house for instance), but we won't control the money until he's gone.

The trust is in your name but your dad is the Executor until he dies, even if you're 50 or 60 years old? Is there a separate one for your sister?

Or the trust is in his name and he maintains control, and then it flows to you and your sister (split) when he dies? What if your mother is still living?

It's kind of shitty if they set up a trust in your name but maintain control indefinitely.

Would they consider restructuring it?

[Anonymous]

How are the trusts invested?

[Anonymous]

I don't have much detail on the trusts other than they are generation skipping (from my grandparents to my sister and me) with my dad as executor (and yes even if my mom is still living it's contingent on my dad). They have their own money which will be passed to their grandkids if there's any left

[Anonymous]

If it's generation-skipping then there is probably something there to plan around. At most, however, I'd plan that the trust amount would be available to pay off your home at retirement if you still have mortgage payments at that time. Anything else is an upside and continue to plan as if you won't have it.

[Anonymous]

You should prioritize saving. Shit happens.

[Anonymous]

Anonymous wrote:I don't have much detail on the trusts other than they are generation skipping (from my grandparents to my sister and me) with my dad as executor (and yes even if my mom is still living it's contingent on my dad). They have their own money which will be passed to their grandkids if there's any left

Would your dad be willing to sit down with you and go over the full details of the trust, amounts, investments, etc so you can plan more effectively? That seems like a reasonable request. People get weird about trusts, but if you position it as just making decisions about retirement savings (not looking like you want to access it sooner), I can't imagine a reasonable person would object.

You should have full information about assets that are yours, and it sounds like the trust is. As the executor, he has a responsibility to do what's in your best interest, and having the information is in your best interest.

Sounds like your dad is also pretty good with money, so maybe you get his advice on how you should invest for retirement & think about upcoming expenses, and that will naturally open the conversation up about the trust.

[Anonymous]

Too many unknowns. You don't even know the amount of the trust. I know that's not all that unusual though is would be nice to be given occasional updates on the value. But if that's not how your family operates, it would be considered inappropriate to ask. So therefore you have to live your life as if you don't have it. And as you said, It sounds like it's dependent on your parent's length of life.

[Anonymous]

I would ask your parents for more info about the trusts for planning purposes. Our generation skipping trust does go to my dh and his siblings when his parents die and then to our children (and nieces and nephews ) when our generation dies. But his parents could use it up...or we could use it up and there would be nothing there even though it is set up to be passed.

And I married into the family...if we divorce I get nothing. If DH dies, his siblings control the trust until it transfers to the next generation. So, yes, if you have the ability to plan for your husband if something goes wrong, that would be smart.

[Anonymous]

Anonymous wrote:I don't have much detail on the trusts other than they are generation skipping (from my grandparents to my sister and me) with my dad as executor (and yes even if my mom is still living it's contingent on my dad). They have their own money which will be passed to their grandkids if there's any left

This is a good idea. Sometimes I wish I were white.

[Anonymous]

Op - I am in a very similar situation. I have a smaller, $1 million trust that came from my grandparents, which I inherit at 40. Beyond that, I have a share in a trust my parents set up for my brother and me, which now is worth about $10 million, but that's not mine until my parents pass, which will hopefully be a very long time away.

I'm a few years and a few kids ahead of you and where DH and I came down was that we save in our 401 k, grandparents have fully funded 529s for the kids, and we don't save much else now. In 4 years, when our youngest goes to K, we will hopefully be able to switch from nanny to au pair and save that 30 k every year. But we also know things happen and we may or may not be able to do that and we are ok with our very small (nonexistent ) saving for now.