Leaving an Inheritance

[Moemg]

Thanks Clifp,
I've only known one person who was left money with a trustee so this shows me a different point of you .

 

[ERD50]

My personal opinion is, if a 30-something-plus isn't responsible enough to deal with a lump sum, they probably are not responsible enough to deal with timed pay-outs either. Blow it all at once, or blow it as it is dished out - what's the diff?

And the idea of a 30 plus responsible person needing to go justify a withdraw to a stranger just seems a bit wrong to me. It seems to be denying that the person is responsible? Or it will seem that way to them?

You said she is responsible, so here is what I would do - occasionally have a little talk, explain how something like a million dollars may seem like a lot, but it likely equates to about $40,000 per year (before taxes) for 30 years (if managed properly).

And there is nothing really wrong with someone 'blowing' $40K on something 'fun' in any one year if they understand how it fits into the overall plan, and have accommodated for it. They don't have to feel guilty about it. Gotta have some fun in life, just make sure the fun is something you can really afford. JMO.


-ERD50

 

[Nords]

My issue with this is I w*rked very hard for the stash their will inherit and I don't want it blown in a few days or weeks. I have a stepped trust that will dispense funds in increments after I reach the great beyond. They both get a chunk before I am cold and then 10% per year. I can't monitor them beyond the grave and don't intent to but I will try to protect them from overwhelming greed as much as possible.

As Dr. McCoy would say: "You're dead, Jim". We don't get to have any more "wants". At some point we should stop trying to protect them, too. We're supposed to raise them to have their own internal motivations & life skills, not external motivations imposed by wills or trustees.

It seems that the issue surrounding many estate plans is who gets to control the money. The implicit assumption is that the beneficiary is either unable or unwilling to control the money, or at least not able to do so to the standards of the dearly departed.

I can understand trusts for beneficiaries who aren't mentally capable of handling their assets or who would lose other income if their inheritance was not in a trust. But for everyone else who's achieved "consenting adult" status it would seem far better to spend the time, effort, & assets on training them how to handle their money than to spend money on having trustees attempt the same task.

Gotta know your beneficiaries, I guess, but if they haven't learned to manage their own money by age 30 then I doubt that a trust will improve their skills. A lot of documentary evidence has shown that trusts tend to encourage non-productive behavior in the beneficiaries, let alone the trustees.

If the beneficiary hasn't learned financial skills during our lives with them, then perhaps inheriting will be the motivation. (I don't see how inheriting a trust is "motivating", unless it's a short-term list of qualifications for the beneficiary to take it over.) Or maybe the waste of running through the inheritance will be the shock that scares them straight.

If people aren't willing to take these risks with their beneficiaries then perhaps the inheritance should consist of small bequests to the primary beneficiaries and the rest to charity.

"We chose a good friend to manage that trust." "It goes into a trust with a very trusted relative ..." i too did that. first, the secondary trustee died; second, the primary trustee died. (third, the primary beneficiary died.) i'm all out of trusted friends and relatives.

I'd never ask a good friend to be my executor, let alone my trustee.

If I was going make any type of control behind the grave it would be in the line of paying for a financial planning course, or a fee only financial advisers. Heck when I redo my will I am going to require my Nephew and Niece visit this board before they make any investments

That'll be a couple of interesting "Hi, I am..." posts. And tell them that 6000+ trustees can't all be wrong!

When our kid turns 18 she's going to end up the executrix and the beneficiary... assuming we have anything to bequeath. I hope she's been paying attention to the family financial discussions, because this will be one heck of a final exam.

 

[Moemg]

Thanks everybody , for all the great points . I do trust my daughter . I guess the problem is I've seen ( first hand ) four young adults get inheritances and blow thru them with nothing to show( which would make me turn over in my urn). I 'm going to just leave her the money and let the chips fall where they may or I'll spend it all so there will be nothing to worry about .

 

[Walt34]

So much depends on the maturity of the inheritor. DW and I know one couple who is planning on an inheritance to pay for the $500k in debt that they've built up over the last 25 years, and these people are in their late 50's. Some never mature. Trouble is, the stubborn SOB won't die! We'll just howl if he leaves it to a charity....

At 25, I thought the coolest thing to buy was an airplane, so I did. Ten years later I was struggling with house payments so doling it out is steps might not be a bad idea. Again, it depends so much on the person.