Don't trust Son-In-Law - Spendthrift trust?

[joeea]

The only conversation is to make sure she understands there isn't a giant pot of gold waiting. In no way will it be stated cruelly, nor does she need to know our reasoning.

How she decides to use that information is none of my business

I understand. I just hate to see families become estranged over financial matters. Very sad.

 

[ivinsfan]

Hehe. I know how to hold my tongue.

It's not your tongue that's the problem it's your opinion of your SIL and by extension your daughter who you think married a money blowing visa seeking jerk.

 

[Aerides]

Unless my parents are Meryl Streep and Daniel Day Lewis, I'm pretty darn sure they adore my DH.

Similarly, I was pretty darn sure they had deep reservations about my Ex-H, but didn't say anything until things blew up, always supported and did all the family stuff and acted like they liked him but we both knew the truth. People can read.

Point being, your daughter knows. Your SIL knows. It's not about the money, but they have a marriage where they know that at least one set of parents is unhappy. Ouch. That's something that doesn't help any marriage.

IDK, I don't have kids, so it's meaningless, but I'd be more concerned with ensuring my DD had a happy successful family, then where the bits of paper and numbers ended up after I was dead.

 

[Rianne]

We have a trust attorney and don't have kids. If our firecalc portfolio reaches the max, the nieces and nephews will be set. I wonder if you can limit the distribution of inheritance to $X amount per year. Like the lottery, instead of getting all of it at once, get it in installments. Unless there's a medical situation where they may need it all. Any family member can be spendthrift and irresponsible with money. I (hate to admit this) have affection for one more than others. I trust one more than others. But feel I should be fair to all.

 

[ivinsfan]

We have a trust attorney and don't have kids. If our firecalc portfolio reaches the max, the nieces and nephews will be set. I wonder if you can limit the distribution of inheritance to $X amount per year. Like the lottery, instead of getting all of it at once, get it in installments. Unless there's a medical situation where they may need it all. Any family member can be spendthrift and irresponsible with money. I (hate to admit this) have affection for one more than others. I trust one more than others. But feel I should be fair to all.

Nothing wrong with admitting you have more affection for one. Sometimes that's related to the way they treat you or just their personalities. You get to decide what's fair and it might not be equal. That said, I most likely would treat each family unit equally so as to minimize any discord or hard feelings.

 

[kgtest]

You can pick your friends but you cannot pick your family, nor can you change someone, they can only change themselves.


I would love to be friends with your son-in-law. Is he even a nice person lol?


In marriage, what's mine is his, and what's his is mine or whatever, so hypothetical outcome you die tomorrow, without a trust, and daughter is beneficiary, she receives half inheritance and then therefore Son-law receives half, since courts recognize the marriage regardless of being asylum seeker etc.



I knew a guy who lost half his mother's estate to a divorce. Ex waited until she passed, then filed. He eventually passed away from Cancer, could have been the stress. If the kids are lucky greedy ex mom might share here late ex husband and late ex mother in laws dough but I wouldn't hold my breathe.



She got the entire mother in law's estate, but it cost her kids there father. Money isn't the only variable.

 

[Earl E Retyre]

We have a trust attorney and don't have kids. If our firecalc portfolio reaches the max, the nieces and nephews will be set. I wonder if you can limit the distribution of inheritance to $X amount per year. Like the lottery, instead of getting all of it at once, get it in installments. Unless there's a medical situation where they may need it all. Any family member can be spendthrift and irresponsible with money. I (hate to admit this) have affection for one more than others. I trust one more than others. But feel I should be fair to all.

That is exactly what we have done. We wrote an Estate Planning Letter which supplements the Wills and designates exactly how we want the proceeds distributed. We defined ours using a formula:
Annual Distribution = (Current Value of Trust) divided by (80-Child's current age). This will give them a reasonable amount of cash each year in installments. The Will itself terminates when the child reaches a certain age and at that time they get the lump sum of the remainder in the estate.

 

[Dash man]

You can pick your friends but you cannot pick your family, nor can you change someone, they can only change themselves.


I would love to be friends with your son-in-law. Is he even a nice person lol?


In marriage, what's mine is his, and what's his is mine or whatever, so hypothetical outcome you die tomorrow, without a trust, and daughter is beneficiary, she receives half inheritance and then therefore Son-law receives half, since courts recognize the marriage regardless of being asylum seeker etc.



I knew a guy who lost half his mother's estate to a divorce. Ex waited until she passed, then filed. He eventually passed away from Cancer, could have been the stress. If the kids are lucky greedy ex mom might share here late ex husband and late ex mother in laws dough but I wouldn't hold my breathe.

I’m not so sure about this. In most states, if the money is not commingled it belongs only to the beneficiary spouse. That’s why it’s important to set up individual accounts where your spouses is not on the account.

 

[OldShooter]

... defined ours using a formula:
Annual Distribution = (Current Value of Trust) divided by (80-Child's current age). This will give them a reasonable amount of cash each year in installments. The Will itself terminates when the child reaches a certain age and at that time they get the lump sum of the remainder in the estate.

(Now channeling my trusts & estates professiional DW: )

Bad idea. The main problem is the rigidity. What if one beneficiary has a medical condition where 24x7 home care is desirable, the trust can afford it, and you would want them to get it? What if a beneficiary has an expensive and unaffordable event, like a house fire or a child in a neo-natal intensive care unit for months and mom loses her job because of the demands of the baby? College tuition? The list of what-ifs is endless.

Your goals are to be fair and to distribute the money slowly. Find an experienced trusts & estates attorney, ideally with some snow on the roof, and he/she will have solved this problem hundreds of times and will have learned from hundreds of situations. From that experience can come a solution that reconciles your goals with the need for flexibility.

Re "Estate Planning Letter," I don't know what that is. A trust would protect your money from lawsuits, divorces, etc. Make sure this "letter" will also provide similar protections.

 

[Aerides]

since courts recognize the marriage regardless of being asylum seeker etc.

He has a Green Card. That means he's a established resident. Not so long ago that was for life - essentially a citizen except you can't vote, and can be deported if you commit a felony. Nowadays a GC is good for 10 years, but renewal is pretty much just paperwork unless you're a criminal.

No GC holder needs to get married to renew a green card, or to become a citizen. A resident can apply for citizenship after having a GC for 5 years, which again, is almost a slam dunk if you have a clean background, pay the fee, and pass the test.

 

[Earl E Retyre]

(Now channeling my trusts & estates professiional DW: )

Bad idea. The main problem is the rigidity. What if one beneficiary has a medical condition where 24x7 home care is desirable, the trust can afford it, and you would want them to get it? What if a beneficiary has an expensive and unaffordable event, like a house fire or a child in a neo-natal intensive care unit for months and mom loses her job because of the demands of the baby? College tuition? The list of what-ifs is endless.

The way I look at it, I am trying to protect the trustee from being manipulated (since the daughter's SO is very manipulative). They could easily say they lost the house in a fire, need medical attention, or really want a college degree to better their lives and I would not believe it. The trustee would not know what is real vs manipulation and I would not want to put that person in the position to spend the time and try and figure it out. If she did not have the inheritance they would have to deal with their situations. So, I would still want the fixed annuity payment to happen. That being said, the Will (and the letter) are written such that the Trustee could override my specific wishes in the letter. I just would not want him to (unless perhaps an extreme situation such as cancer).

Re "Estate Planning Letter," I don't know what that is. A trust would protect your money from lawsuits, divorces, etc. Make sure this "letter" will also provide similar protections.

I have a Trust. The letter is written as a supplement to the Wills. It is less formal and contains things like: distribution of personal property, funeral instructions and instructions for how to distribute the estate. It does say that if any inconsistencies exists then the Will is governing.

 

[Teacher Terry]

A friend of mine was telling me that green card holders are being treated differently than in the past especially if you are a minority or other considered undesirable. My friend is from Europe and is married to a woman. She is afraid to leave the country to visit family until she becomes a citizen because she has read that some people aren’t being let back in.

 

[audreyh1]

You can pick your friends but you cannot pick your family, nor can you change someone, they can only change themselves.


I would love to be friends with your son-in-law. Is he even a nice person lol?


In marriage, what's mine is his, and what's his is mine or whatever, so hypothetical outcome you die tomorrow, without a trust, and daughter is beneficiary, she receives half inheritance and then therefore Son-law receives half, since courts recognize the marriage regardless of being asylum seeker etc.



I knew a guy who lost half his mother's estate to a divorce. Ex waited until she passed, then filed. He eventually passed away from Cancer, could have been the stress. If the kids are lucky greedy ex mom might share here late ex husband and late ex mother in laws dough but I wouldn't hold my breathe.



She got the entire mother in law's estate, but it cost her kids there father. Money isn't the only variable.

The guy lost half his mother’s estate to divorce because he commingled his inheritance with joint funds.

Inheritances are not automatically marital property.

 

[kgtest]

He has a Green Card. That means he's a established resident. Not so long ago that was for life - essentially a citizen except you can't vote, and can be deported if you commit a felony. Nowadays a GC is good for 10 years, but renewal is pretty much just paperwork unless you're a criminal.

No GC holder needs to get married to renew a green card, or to become a citizen. A resident can apply for citizenship after having a GC for 5 years, which again, is almost a slam dunk if you have a clean background, pay the fee, and pass the test.

Ahh, good info. Can you bypass any "test" by just getting married to a citizen? Sorry for the sidetrack? Trying to understand the OPs original view where he makes it sounds as if SIL has an advantage to marrying beyond love?

 

[Sunset]

Ahh, good info. Can you bypass any "test" by just getting married to a citizen? Sorry for the sidetrack? Trying to understand the OPs original view where he makes it sounds as if SIL has an advantage to marrying beyond love?

No, still have to do all the paperwork and tests, but the time limit is shortened to 2 years of marriage.
After that you can become citizen.

 

[pj.mask]

Up to you on how delicate your DD is with respect to your feelings on SIL. It’s your money and you can do what you like with it, but I wouldn’t think unreasonable for your daughter to outline her suggestions backed up with justification. You don’t have to follow that.

If you leave a million bucks and the daughter/couple can’t get by with an extra 40k/yr then is a special case one time distribution really going to help? I’d rather have set amounts passing on to grandkids.

 

[Sojourner]

That is exactly what we have done. We wrote an Estate Planning Letter which supplements the Wills and designates exactly how we want the proceeds distributed. We defined ours using a formula:
Annual Distribution = (Current Value of Trust) divided by (80-Child's current age). This will give them a reasonable amount of cash each year in installments. The Will itself terminates when the child reaches a certain age and at that time they get the lump sum of the remainder in the estate.

Although this seems like a good approach in theory, IMHO it could end up hurting the kids in unexpected ways. I'm thinking of the well-documented phenomenon described in The Millionaire Next Door, where adult children who receive regular cash gifts from their parents often end up doing worse (i.e. amassing lower levels of net worth) than children who don't receive such gifts. I realize these annual trust distributions aren't technically "gifts", but I would imagine they could have exactly the same effect in suppressing the kids' wealth-building motivation/success. Check out chapter 5 of The Millionaire Next Door for an in-depth discussion of all this. Highly recommended for anyone trying to figure out how to pass their wealth on to kids, grandkids, etc.

 

[MarieIG]

Unless my parents are Meryl Streep and Daniel Day Lewis, I'm pretty darn sure they adore my DH.

Similarly, I was pretty darn sure they had deep reservations about my Ex-H, but didn't say anything until things blew up, always supported and did all the family stuff and acted like they liked him but we both knew the truth. People can read.

Point being, your daughter knows. Your SIL knows. It's not about the money, but they have a marriage where they know that at least one set of parents is unhappy. Ouch. That's something that doesn't help any marriage.

IDK, I don't have kids, so it's meaningless, but I'd be more concerned with ensuring my DD had a happy successful family, then where the bits of paper and numbers ended up after I was dead.

OP cannot "ensure" that DD has a successful family. That is DD's & SIL's responsibility - not OP's. (He CAN avoid deliberately seeking to stir up trouble.) Many couples have money issues, they have to work it out, not depend on the money of a parent. (Gifts here and there are fine.)

As to the bits of papers and numbers, is that referring to OP's life savings? OP may view the years he put into accumulating the potential inheritance for his children as something less trivial than bits of papers and numbers. I know I do.

OP is young. His daughter could easily be pushing 60 by the time he passes. A secure inheritance could make a huge difference in her senior years. There are plenty of women who do have to start over in this 50's following a divorce and it's not necessarily easy.

And as to in-laws not liking the son or daughter in law. When we started out, it was not a question of "reading" the truth. It was in-laws screaming at the top of their lungs. A week after our wedding my MIL stood in the street screaming about what a horrible person I was. When I was accepted into graduate school, MIL told my DH to divorce me, take the children back to Europe and she would find him a new wife who wouldn't work outside the home. My parents were no bargain to begin with either. (We coordinated our own defense strategy. Neither were disrespectful to the in-laws: the blood child would go to the defense of the spouse.) Over time, my parents came to love DH (he deserved it), and my in-laws me.

We are now in-laws, and our goal is to treat the children and their spouses with respect and to not be overly intrusive. I/we haven't made up my mind as to how I/we leaving assets, but whatever I/we decide, they will just have to deal with it. All children are loved, but not all have equal needs.

But, bottom line, it's up to the spouses to grow-up work out their own marriage.

 

[FlaGator]

A friend of mine was telling me that green card holders are being treated differently than in the past especially if you are a minority or other considered undesirable. My friend is from Europe and is married to a woman. She is afraid to leave the country to visit family until she becomes a citizen because she has read that some people aren’t being let back in.

I'm sure she's 110% correct - only since November 2016 the U.S. has a different approach to "undesirables"......

If she's a friend, firmly suggest she verify directly with Customs/ICE/State/her home country embassy before she postpones plans to travel home. Please report back so we know what the real story is

 

[Teacher Terry]

She is a good friend and highly educated. Her employer in Europe is employing her here. She will not visit her home country until she is a citizen.

 

[brett]

Neither of our children have a clue as to our financial situation. All they know is that we are comfortable. At this point in time, that is all that they need to know.

We have made provisions for our grandchildren's education in our wills. We contribute on an annual basis plus there is a substantial legacy amount for that purpose.

Spouses and common law relations of children can be an issue. So we have simply put off any decision for ten years or so other than a direct split in the event of our deaths with money off the top going into protected education funds for current and future grandchildren. It is all that we can see ourselves doing at this point.

Even if we choose to help a child out in a home purchase we will be very careful how we structure it.

My uncle's daughter married a med student. Gave them a house, car, and him a income from the business while he was in school. Daughter resented the fact that the house and car were not in either of their names.

Six years late he graduates, then divorces her. Alas the house remained in my uncles name and the vehicle was a company vehicle. He tried to get part of them but of course failed.

Our accountant and lawyer tell us to be very careful IF our son, while living common law, decides to buy a home that we contribute to.

 

[Mdlerth]

"Never hate your enemies. It affects your judgment."

OP cannot "ensure" that DD has a successful family. That is DD's & SIL's responsibility - not OP's. (He CAN avoid deliberately seeking to stir up trouble.)...

...bottom line, it's up to the spouses to grow-up work out their own marriage.

Spot on, and consistent with the advice of Vito Corleone to Sonny: "Never interfere between a man and a woman".

 

[MarieIG]

Neither of our children have a clue as to our financial situation. All they know is that we are comfortable. At this point in time, that is all that they need to know.

We have made provisions for our grandchildren's education in our wills. We contribute on an annual basis plus there is a substantial legacy amount for that purpose.

Spouses and common law relations of children can be an issue. So we have simply put off any decision for ten years or so other than a direct split in the event of our deaths with money off the top going into protected education funds for current and future grandchildren. It is all that we can see ourselves doing at this point.

Even if we choose to help a child out in a home purchase we will be very careful how we structure it.

My uncle's daughter married a med student. Gave them a house, car, and him a income from the business while he was in school. Daughter resented the fact that the house and car were not in either of their names.

Six years late he graduates, then divorces her. Alas the house remained in my uncles name and the vehicle was a company vehicle. He tried to get part of them but of course failed.

Our accountant and lawyer tell us to be very careful IF our son, while living common law, decides to buy a home that we contribute to.

Your Uncle was both generous, and smart.

What about giving your son some $ towards a Roth instead?

 

[workburnout]

I did a revocable spendthrift trust for the reason you mentioned. My sister and her husband are irresponsible with money. I also see them possibly getting divorced in the future. I want my assets to go to my niece who is my sister's kid. However, she is a minor and also not great with money. I set up the spendthrift revocable trust to go to her in increments. If I die, my assets will go to the trust through a pourover will. Then, the trustee (a bank) will give her the assets when she reaches the ages the trust specifies - 25, 33 and 40.
If she blows through part of the money at 25, she will still have more left later.

I anticipate I will live to see her reach well above 40. However, I can revoke the trust at any time and leave the money to her as a direct beneficiary instead.
As of now, the revocable trust protects my assets should I die unexpectedly.

Without the trust, the money would all go to my elderly mother and her husband, or my sister for the benefit of my niece. It would get wasted either way - and my niece would get none of it as an adult.

Now, if my niece ends up having kids, I may make changes so her kids get some of it, but that would be a long way off since niece is still in middle school now.

Edit to add - No one in my family knows anything about the trust, or the amount of assets I have. I will not be telling them. A distant cousin (very distantly related) would be exectutor should I die - and she knows I have the trust but she is reliable and will not say anything. She does not know the amount of assets in it and she'd not the type of person to care or get nosy - she has plenty of her own assets - probably more than I do. She knows it would be handled by the bank who would administer the trust.

 

[Earl E Retyre]

This is great info. Might be a simpler way of doing it vs my way, which is an annual calculation. Question for you is does the will itself specify the payouts (age 25, 33, 40)? If so, would you mind sharing the legal verbiage in the will because I may change to look like this. It is less complex, only requires the trustee to make 3 payments, and is written in the will vs an informal document to the trustee so i am more ensured it would be followed. Thanks. One disadvantage i see is after the 1st age is passed (ie you live past her turning 25) do you need to change your will?