Trust for kids from grandparents: How should I handle it?

[Anonymous]

Hello all,
I know family money is a tough subject but I'm going to dive right into it this rain morning. I would appreciate your thoughts.

My father saved a lot of money during his career as a federal government employee. He was very frugal from the beginning of his life until the end. He died in his 70s while still working so he hadn't touched his retirement funds yet.

On his death bed he asked that a trust be established for his four grandchildren. Two of them are my children. The starting amount for the trust is several hundred thousand.

My situation: I haven't inherited anything from my family. Our family has one moderate income: a federal government salary around 140,000. We bought our house in DC during the first bubble so we have a manageable mortgage. Our retirement savings are on track. There is some money saved for the kids' college but nothing crazy. We shop at ALDI and are very frugal much as my father was. We've had minor family help with our wedding and downpayment and a car. All together, this helped totalled around 60,000. I'm grateful for this money and it has helped us live a little better than we would have otherwise. We don't make a ton of money. It's been a stretch to pay for for good camps. I don't shop at Whole Foods. We buy clothes at the thrift store. We make it work on one salary, but it's always been a stretch. We're not poor but we definitely have to think about money.

Before my father's death I had planned on going back to work in order to fund my kids' college and possibly private school for my child with High Functioning Autism.

Now things have changed, but there are a couple of ways we could go with this trust. I would appreciate your thoughts on which way we should go. I'm sure I'm missing considerations.

1) I could go back to work anyhow and still fund their education, and then my kids inherit a half million each when they are in their mid-late 20s. There are no restrictions on what the money should be used for. They may blow it. They may buy a house. They may seed family money for the next generation. Who knows?

2) I could keep staying home and use the money to pay for specialized camps and then high school and college. We will likely put a generous amount in a 529 for each kid so that they'll spend it mostly on school. We would invest it and may end up leaving them with money for a downpayment for a house, but, depending on the market, they won't likely have a huge nest egg at the end of the day.

Considerations:
1) I value that I didn't recieve a dime from my parents when I was starting out. I learned to be self-reliant and we've saved a lot for retirement through our frugality. My upper-middle class background has provided me with a great start, and I'm privileged and always have been. I'm grateful for that.

2) These days the global economic climate is crazy and family money seems to be a big marker dividing those who struggle from those who seem to have it easier. Of course I want my kids to have easier lives and be provided for in their retirement.

3) But I don't want them to be spoiled trust fund kids who count on coasting by on family money forever. I am inclined to focus on giving them opportunities they wouldn't otherwise have with this money as I believe my father intended rather than focusing on living my life even more frugally in order to preserve this money to give to them in-tact in their 20s.

Thoughts? Opinions? Resentment you'd like to express about the concept of "family money" in general are all welcome. I feel really weird about this unexpected turn of events and how I'm responsible for this (to me) big chunk of change. What would you do?

[Anonymous]

I'd without questions use it to stay home, enrich our lives now, and pay for their college educations (and graduate school etc).

That is already a HUGE leg up. Coupled with the fact that you are your DH will be taken care of financially for the rest of your lives (don't blow this part) will give your kids an enormous advantage.

Any money that is leftover after that is gravy while still giving your children massive benefits in life.

[Anonymous]

I would make sure college was fully funded (highschool if you need it), keep some around for special opportunities or camps you would not otherwise be able to afford, and save the rest for when they are adults. Each year, Grandpa can fund one special thing- a trip, a camp, etc.

I would work as I had planned previously. Not to be mean, but it sounds like he wanted the grandkids to be the primary recipients of the money. You might have some more flexibility in the type of job you can take, knowing that your kids future is secure, but I don't think you not working is true to his wishes.

I received money from a grandparent, and it allowed me to have zero college debt and helped me "launch" as an adult. I always think about my grandfather in connection with my college experience- even though he was long gone. I love that I have that added "memory" of him and his contribution to my life.

[Anonymous]

I don't think it's really worth the effort to put a few hundred thousand into a trust. What I'd do is power fund a 529 for each child - $75k to each. You can now pay $10k in private school tuition from a 529 plan. If kids are young enough, and funds allow, you can do this again in 5 years' time. Keep the remainder to apply to camps, tutors, etc. as they grow up.

from the interwebs:
you can make a lump-sum contribution to a 529 plan of up to five times the annual gift tax exclusion ($75,000 in 2018), and completely avoid federal gift tax, provided no other gifts are made to the same beneficiary during the five-year period.

[Anonymous]

You sound resentful that the money was left to your kids and not to you.

[Anonymous]

Anonymous wrote:Hello all,
I know family money is a tough subject but I'm going to dive right into it this rain morning. I would appreciate your thoughts.

My father saved a lot of money during his career as a federal government employee. He was very frugal from the beginning of his life until the end. He died in his 70s while still working so he hadn't touched his retirement funds yet.

On his death bed he asked that a trust be established for his four grandchildren. Two of them are my children. The starting amount for the trust is several hundred thousand.

My situation: I haven't inherited anything from my family. Our family has one moderate income: a federal government salary around 140,000. We bought our house in DC during the first bubble so we have a manageable mortgage. Our retirement savings are on track. There is some money saved for the kids' college but nothing crazy. We shop at ALDI and are very frugal much as my father was. We've had minor family help with our wedding and downpayment and a car. All together, this helped totalled around 60,000. I'm grateful for this money and it has helped us live a little better than we would have otherwise. We don't make a ton of money. It's been a stretch to pay for for good camps. I don't shop at Whole Foods. We buy clothes at the thrift store. We make it work on one salary, but it's always been a stretch. We're not poor but we definitely have to think about money.

Before my father's death I had planned on going back to work in order to fund my kids' college and possibly private school for my child with High Functioning Autism.

Now things have changed, but there are a couple of ways we could go with this trust. I would appreciate your thoughts on which way we should go. I'm sure I'm missing considerations.

1) I could go back to work anyhow and still fund their education, and then my kids inherit a half million each when they are in their mid-late 20s. There are no restrictions on what the money should be used for. They may blow it. They may buy a house. They may seed family money for the next generation. Who knows?

2) I could keep staying home and use the money to pay for specialized camps and then high school and college. We will likely put a generous amount in a 529 for each kid so that they'll spend it mostly on school. We would invest it and may end up leaving them with money for a downpayment for a house, but, depending on the market, they won't likely have a huge nest egg at the end of the day.

Considerations:
1) I value that I didn't recieve a dime from my parents when I was starting out. I learned to be self-reliant and we've saved a lot for retirement through our frugality. My upper-middle class background has provided me with a great start, and I'm privileged and always have been. I'm grateful for that.

2) These days the global economic climate is crazy and family money seems to be a big marker dividing those who struggle from those who seem to have it easier. Of course I want my kids to have easier lives and be provided for in their retirement.

3) But I don't want them to be spoiled trust fund kids who count on coasting by on family money forever. I am inclined to focus on giving them opportunities they wouldn't otherwise have with this money as I believe my father intended rather than focusing on living my life even more frugally in order to preserve this money to give to them in-tact in their 20s.

Thoughts? Opinions? Resentment you'd like to express about the concept of "family money" in general are all welcome. I feel really weird about this unexpected turn of events and how I'm responsible for this (to me) big chunk of change. What would you do?

This is among the post confusing posts I have ever read.

To whom did your father actually leave the money?

Did he leave it to the children, or to you?

Did he establish a trust, or ask you to do so?

If he left the money for the children, or left it to you with the request that you establish a trust for the children, then the money is theirs and not yours.

Why would you not go back to work, as previously planned?

[Anonymous]

Anonymous wrote:You sound resentful that the money was left to your kids and not to you.

Agree. It seems like you are trying to find a way for you to benefit from the money, and not just your children.

[Anonymous]

Anonymous wrote:I don't think it's really worth the effort to put a few hundred thousand into a trust. What I'd do is power fund a 529 for each child - $75k to each. You can now pay $10k in private school tuition from a 529 plan. If kids are young enough, and funds allow, you can do this again in 5 years' time. Keep the remainder to apply to camps, tutors, etc. as they grow up.

from the interwebs:
you can make a lump-sum contribution to a 529 plan of up to five times the annual gift tax exclusion ($75,000 in 2018), and completely avoid federal gift tax, provided no other gifts are made to the same beneficiary during the five-year period.

+1

And why send the kids to private schools, anyway? Direct all money to college.

A few hundred thousand will make a difference, but is not life-changing.

[Anonymous]

Anonymous wrote:I'd without questions use it to stay home, enrich our lives now, and pay for their college educations (and graduate school etc).

That is already a HUGE leg up. Coupled with the fact that you are your DH will be taken care of financially for the rest of your lives (don't blow this part) will give your kids an enormous advantage.

Any money that is leftover after that is gravy while still giving your children massive benefits in life.

The money is the children's money, not OP's. It should not be used to SAH unless she is comfortable spending what is not hers.

Enriching children's lives has nothing to do with SAH, anyway.

How are OP and her DH taken care of financially for the rest of their lives?

[Anonymous]

Read the trust docs carefully to see how the money can be used. If it can be used for college then use it for college. Your children will benefit and you will benefit. In terms of going back to work if it's something you'd really like to do, do it and use the money to build up your retirement savings.

[Anonymous]

Anonymous wrote:Read the trust docs carefully to see how the money can be used. If it can be used for college then use it for college. Your children will benefit and you will benefit. In terms of going back to work if it's something you'd really like to do, do it and use the money to build up your retirement savings.

Sounds like there aren't trust documents, which is how OP has an opening to use the money for herself.

OP, what does your late dad's will say about who gets this money?

[Anonymous]

Anonymous wrote:

Anonymous wrote:Hello all,
I know family money is a tough subject but I'm going to dive right into it this rain morning. I would appreciate your thoughts.

My father saved a lot of money during his career as a federal government employee. He was very frugal from the beginning of his life until the end. He died in his 70s while still working so he hadn't touched his retirement funds yet.

On his death bed he asked that a trust be established for his four grandchildren. Two of them are my children. The starting amount for the trust is several hundred thousand.

My situation: I haven't inherited anything from my family. Our family has one moderate income: a federal government salary around 140,000. We bought our house in DC during the first bubble so we have a manageable mortgage. Our retirement savings are on track. There is some money saved for the kids' college but nothing crazy. We shop at ALDI and are very frugal much as my father was. We've had minor family help with our wedding and downpayment and a car. All together, this helped totalled around 60,000. I'm grateful for this money and it has helped us live a little better than we would have otherwise. We don't make a ton of money. It's been a stretch to pay for for good camps. I don't shop at Whole Foods. We buy clothes at the thrift store. We make it work on one salary, but it's always been a stretch. We're not poor but we definitely have to think about money.

Before my father's death I had planned on going back to work in order to fund my kids' college and possibly private school for my child with High Functioning Autism.

Now things have changed, but there are a couple of ways we could go with this trust. I would appreciate your thoughts on which way we should go. I'm sure I'm missing considerations.

1) I could go back to work anyhow and still fund their education, and then my kids inherit a half million each when they are in their mid-late 20s. There are no restrictions on what the money should be used for. They may blow it. They may buy a house. They may seed family money for the next generation. Who knows?

2) I could keep staying home and use the money to pay for specialized camps and then high school and college. We will likely put a generous amount in a 529 for each kid so that they'll spend it mostly on school. We would invest it and may end up leaving them with money for a downpayment for a house, but, depending on the market, they won't likely have a huge nest egg at the end of the day.

Considerations:
1) I value that I didn't recieve a dime from my parents when I was starting out. I learned to be self-reliant and we've saved a lot for retirement through our frugality. My upper-middle class background has provided me with a great start, and I'm privileged and always have been. I'm grateful for that.

2) These days the global economic climate is crazy and family money seems to be a big marker dividing those who struggle from those who seem to have it easier. Of course I want my kids to have easier lives and be provided for in their retirement.

3) But I don't want them to be spoiled trust fund kids who count on coasting by on family money forever. I am inclined to focus on giving them opportunities they wouldn't otherwise have with this money as I believe my father intended rather than focusing on living my life even more frugally in order to preserve this money to give to them in-tact in their 20s.

Thoughts? Opinions? Resentment you'd like to express about the concept of "family money" in general are all welcome. I feel really weird about this unexpected turn of events and how I'm responsible for this (to me) big chunk of change. What would you do?

This is among the post confusing posts I have ever read.

To whom did your father actually leave the money?

He left the money to my mother because he didn't have a chance to update his will before he died. She is establishing the trust.

Did he leave it to the children, or to you?

To my mother because he hadn't had a chance to change his will. She wants to honor his request so she's establishing the trust. She has about 1.5 million on top of a federal pension and social security so she'll be fine otherwise I would ask her to keep the money.

Did he establish a trust, or ask you to do so?

He expressed is wishes in a brief, not-legally-binding conversation.

If he left the money for the children, or left it to you with the request that you establish a trust for the children, then the money is theirs and not yours.

Why would you not go back to work, as previously planned?

Because the reason I'd go back to work is primarily to make enough money for their education.

That's covered now.

My working at this point would be all about whether or not I want to. Not because I feel I have to. I'm grateful to be in this privileged position. I may not go back to work. I may. I may consult. I may write for minimal pay.

[Anonymous]

Anonymous wrote:

Anonymous wrote:You sound resentful that the money was left to your kids and not to you.

Agree. It seems like you are trying to find a way for you to benefit from the money, and not just your children.

New poster here. I don't see it like that. I think your father left the money for your kids but in my opinion if you fund their college with it then it can benefit your life too in a major way. You can save for other things. College is such a big expense for parents.

[Anonymous]

OP here.

Sorry I was so confusing. It's a complicated situation.

Even reading and responding to these few posts has helped me clarify my thinking.

I really don't resent not inheriting at this point because I know the reason my sister and I didn't get it. And I get why my dad would have made this decision. I won't get into it here, but it's a good reason.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Read the trust docs carefully to see how the money can be used. If it can be used for college then use it for college. Your children will benefit and you will benefit. In terms of going back to work if it's something you'd really like to do, do it and use the money to build up your retirement savings.

Sounds like there aren't trust documents, which is how OP has an opening to use the money for herself.

OP, what does your late dad's will say about who gets this money?

OP here.

1) The will wasn't updated so it says nothing about any of this.

2) A lawyer is writing up trust documents that the money will go to benefit the children. It's vague.

3) How is using the money for camps for a special needs kid that we couldn't otherwise afford, College and grad school for them, and possibly private high school for one kid if he needs it (again, he has autism) using it for myself rather than for my kids? I don't get it.