Living Trust for Child/How Detailed?

[retiringby50]

We need to work on our living trust (LT)soon. I'll start by saying that I'm a control freak. For example, if I give leave you $20,000 for your college tuition, I expect you to go to college and get a degree. If not, I will come up with other stipulations like "if you don't attend college, this amount will be given to you when you are 35" or something like that. This example is not really for my daughter but for nieces and nephews.

So my first question is whether you are as detailed in writing out your will/LT. The other thought is that I'm dead, so what do I care.

We are in our early 40's, and DD is almost 11. She is sweet and loveable, probably like how Lindsey Lohan and Britney Spears were when they were young. If all goes well though, she will be more like us and less like them! We know who we want for her guardian in case we keel over now and together. My main goal (for financial related stuff) is that she doesn't have to worry about money (like truly live paycheck to paycheck or doesn't HAVE to work part time during college) but is still motivated to work hard in her chosen field. I don't want her to think, "now that I have two houses and $2 million dollars, I'll just sit around at home, buy a new car, collect rent, play with my friends, not finish college" etc. I also don't want to set up the money in a way where she will manipulate it (oh I'll get money to buy a house, so I'll buy it and then sell it, and then I can fool around), although I don't mind that she retires earlier because of what we left her (maybe 40, but not 25!). I do realize I need to balance it with the fact that I've done my best to raise her and I need to let go.

So... do you have ideas of setting up the inheritance so that she doesn't count on it but lives her life "properly"? Right now I'm just covering the next 15 years or so. When she's 25, I'll know more about how she's turned out as an adult, and I can make modifications.

 

[REWahoo]

So... do you have ideas of setting up the inheritance so that she doesn't count on it but lives her life "properly"? Right now I'm just covering the next 15 years or so. When she's 25, I'll know more about how she's turned out as an adult, and I can make modifications.

So you'll understand a little about my perspective, our two daughters are in their 30's, married with families...

I'd caution you not to try too hard to direct your daughters life from the grave. What you and I might consider to be living a "proper" life might not be the mold she's in when she gels. And that isn't necessarily a bad thing.

While it may make good sense to have some restrictions on how she could use the inheritance before she reaches maturity (be that age 20 or 50 or never), realize such constraints can backfire. If you don't allow her some wiggle room to make her own decisions and mistakes in life, you may end up creating resentment and helping to create the very problem you are trying to prevent.

You can only do so much, then it's up to them...

 

[HpRyder]

I've used a trust for about 30 years now. The trust will become effective after you and your wife are dead or unable to conduct your affairs. Until then, you control the trust assets and can do with then what you will. You can attach any conditions you want. However after you or your wife are no longer trustees, the document specified alternate trustee will or should be bound by what is written. If he doesn't follow the document directions the only recourse is for one of the beneficiaries (presumably one of the children) to take the trustee to court, the costs of which are usually paid for by the trust. If your detailed directions to the trustee force him to act not in the best interests of the beneficiaries (children) then they will be hurt, not you. If as a result one of them sues the trust, all will lose. If your directions are flexible enough, allowing the trustee to meet the living beneficiaries’ situation, possibly 30-40 years in the future, then beneficiaries benefit. You trust the trustee to interpret the document to benefit the beneficiaries. That’s why you chose the trustee. You trusted his judgment to interpret the document to the benefit of the beneficiaries. Since you can change the trust almost up until it is needed, you can watch the children mature, then change the documents content as time progresses and their situation changes.

 

[retiringby50]

If you don't allow her some wiggle room to make her own decisions and mistakes in life, you may end up creating resentment and helping to create the very problem you are trying to prevent.

You can only do so much, then it's up to them...

Good reminder. Thanks. Maybe no conditions but give her money incrementally?

 

[DangerMouse]

We have no children, but have been thinking how we are going to deal with the inheritance issue with relatives. The best we have come up with is to have some kind of trust where the dividends will be distributed but the capital can not be touched. That would give individuals a bit of extra spending however will not provide them with sufficient funds to enable them to model themselves on Paris Hilton.

 

[RunningBum]

Good reminder. Thanks. Maybe no conditions but give her money incrementally?

Incrememental seems to be a good standard. That way if she really goes off the tracks she can't go through it all at once. Hope for the best, prepare for the worst. It seems like a reasonable and fair way to have some control and protection, without some restrictions that probably won't wind up accomplishing what you want.