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

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[quote=Anonymous][quote=Anonymous][quote=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.

[b]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.[/b]

[b]My situation: I haven't inherited anything from my family. [/b] 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.

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

[b]Now things have changed,[/b] 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?

[/quote]

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

To whom did your father actually leave the money?

[/quote]

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.

[quote]

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

[/quote]

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.

[quote]
Did he establish a trust, or ask you to do so?
[/quote]

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

[quote]

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?

[/quote]

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.  [/quote]

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