We are struggling with this type of decision right now. We already have a Will - and have had it since the kids were born. But DH is executor on his late sister's estate and it has been HORRIBLE because she had nothing in writing the way she actually wanted it. So it's made us rethink our decisions from the first time around.
I hear all of you (and my dh who would prefer it this way) about setting up a trust. My MAJOR concerns about this are:
1) What if my sister (who will take my kids) comes up with something unexepcted and needs additional $$ from 'my' money? Not sure what it would be here but maybe something happens to the economy and they need extra $$ just for the basics.
The guardian can take draws against the trust for the maintenance of the children. Think of it as child support. The money is not "untouchable" to the guardian but only money that can be proved to benefit the child can be drawn. The trustee will decide if the draw is legitimate.
2) If DH and I pass - my sis and her dh will have 5 kids between the ages of 7 and 11...Is it cumbersome to get 'approval' to get $$ from a trust? Honestly, if she has to fill out forms, get approvals and wait a couple weeks for the cash - that is NOT something I want to add to her burden - I'd rather have her be able to put it into a savings account to grab it if needed.
There is a process but I do not know the procedure.
3) And this one's the big one - IF we decide to give the balance of a trust to our kids at age 21 or 25 - Is there a way for my sister to fight that if it became necessary? Now, I'm very confident that my kids will end up 'responsible' but I have no idea that they will be at age 21 or even 25. What if dd ends up living with some deadbeat loser at the age of 25 who won't get a job and just sucks money out of her? Even responsible girls have been known to fall victim to this type of loser at some point in their youth...I have no desire for her to inherit a couple hundred thousand dollars right then if this is the case. I have a brother who is a drug addict - started around the age of 18. I try my best every day to make sure this won't happen to my own kids - but WHO KNOWS?? Especially with the emotional burden of losing your parents. What if one of my kids is off the right track at 21 or 25? Again, no way I want them to get hundreds of thousands of dollars at this point if it's the case. My SIS would be able to assess this situation (and I think there is a much better chance she stays stable and responsible since she's an adult and has been for 45 years than my kids being 100% responsible enough at such a young age) - and either give my kids their money at an appropriate time (before buying a house....when going to grad school...or just when they're settled and ready to start the rest of their lives) OR save that money to use for them for something to help them out of their situation (for counseling....for some sort of training to find a job....for doctor's care). I just can't stand the thought of deciding right now exactly when my kids will be responsible enough to get that large chunk of money. I feel much more comfortable putting that into the hands of my sister who can determine at that time how my kids are doing and respond accordingly.
When they reach the age stated in the trust they get what is theirs. You can add stipulations to the trust that would cover this, as well as ways they could forfeit their part. Anything can be added to a trust, but with each stipulation there will always be a scenario that it would not work with.
Thoughts on any of this? Dh and I are currently 'arguing' about it. I can't come up with a good way around my concerns.
