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

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

[/quote]

It is highly unusual for a person to leave money to children or grandchildren unless that person's spouse had predeceased him.

The normal course of business is for your mom to inherit the money, and to leave money to her children when she dies.[/quote]

Actually, it's not unusual for those will plenty of assets to support the surviving spouse to establish a generation-skipping trust.

If the amount is several hundred thousand to be shared by 4 grandchildren, it's not really enough to fully fund college for all 4.  The easiest thing to do would be to set up 529s for the kids.  However, if you don't want to limit the use of the $$ to college/private school, a trust is the way to go.  You can establish a trust that would turn the money over to the kids at a certain age (say 30, or portions at specified ages), with provisions that the trustee can distribute the funds prior to that.  You can give the trustee full discretion, or you can specify that its for certain purposes -- education, house downpayment, etc.  [/quote]

pp here -- just saw that you clarified that it is a few hundred per kid.  That may be (but might not be) more than the cost of college for the kids, so a trust probably is the best approach.  If both sets of parents are reliable, I'd have the parents serve as trustees with full flexibility to use the funds to the benefit of the children.  You can expect the trusts to throw off around $10,000-15,000 in income every year.  That's plenty to fund camps, etc.  Then use the principal for college, when the time comes.  Then specify that the remainder gets distributed at a certain age.  [/quote]

Thank you.  This is very useful.  I think this is what we'll do.

Another clarification to offer is that three of the kids already have 529s my dad funded with around 100K in each and my youngest has one with just 15K.  Fully funding my youngest's 529 is the first thing I want to do.  My other kid is in early elementary so there's time for the money to grow.

The trust fund kid thing is really more of a mindset issue.  I know that the $600K or so they will now have is not and will not grow to be enough to make them actually be trust fund kids.  But kids have no concept of money and even 25 year olds often don't really have a concept of money or the future.  (depends on the kid) and I don't want them to know about the funds and grow up without the drive or ambition that led their grandfather and me to be very careful with money.  But ultimately, there's only so much that I can do to set them on a path towards financial common sense.   [/quote]

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