Trusts, legal planning, who takes the kids

[ivinsfan]

When they are siblings living together it's a whole different story. trust me on this!

 

[JohnKeating]

We are currently in a very similar situation. We have 2 children (12, 10) and the oldest also has Down syndrome. We've been working with a local financial planning firm that specializes in special needs planning to help get and keep all the documents and processes inline.

This includes reworking our wills including a special needs trust, reworking our beneficiary designations across our accounts, writing a “Letter of Intent” (document that outlines our desires and expectations of our daughter for the primary caretaker if we’re not around), communicating our wishes/plan to those involved, and reviewing our financial plan holistically given possible living circumstances in the future.

Top questions/topics covered

How to fund the trust? Insurance vs. assets. How do taxable vs. pre-tax accounts differ when funding the trust?

When is the trust “in place”? How do others place money in the trust in their wills and how does that affect what we’re doing?

Corporate vs. individual trustee? We went with a corporate trustee but gave the executor the ability to change that if they desire.

We’re starting to talk about how the ABLE Act will affect our planning. https://www.kitces.com/blog/will-se...or-disabled-beneficiary-special-needs-trusts/

Essentially, the way I view it is it’s an ongoing process just like the rest of financial/life planning and will evolve over time due to individual changes, family changes, political changes, etc. It’s just another aspect to keep on top of annually.

 

[ivinsfan]

Have you shown the letter with your desires and expectations to the people you have selected as their caretakers? If I was the step in for you I would want to see that in advance so I could talk it over with you. I wouldn't enjoy getting a letter from the grave full of instructions, that I might not agree with or be able to carry out. I would feel like the babysitter and not the parental unit.

 

[JohnKeating]

Yes, we've started with family first as their the primary and to get their feedback. We'll then distribute it to a few close friends in our DS community as they would be a vital component to her support system as well if we're gone.

The document has a wide variety o information from medications, allergies, likes, dislikes, strengths, weaknesses, goals, aspirations, etc. It's not so much a day to day plan (although there is some of that) we use it more of a vision document to help others understand and support her.

What I like about this is it forces us to outline a plan for her, communicate it with others, and evolve it over time. In the coming years she'll be a part of this process too and help guide the document.

 

[rodi]

Hey now Laurence, don't dismiss the childfree outright! DH and I are the named guardians for my sister's kids and we'd manage okay if the worst happened. I am more relieved by every year passing without incident, though, not gonna lie!

I'd rather be faced with the prospect of three teenagers than little ones, any day.

LOL - My sister is the named guardian for my boys... and has no kids of her own. That said - she's a 5th grade teacher and knows how to control my boys with a stern look and the "teacher voice". (she's demonstrated it for me - it works.... but only when she does it - doesn't work when I try it.) Her husband has coached high school students and mentored church youth groups.... He will likely be more frustrated than Sis... but will do fine.

 

[CaliKid]

This I don't get, if you trust your kids life and upbringing to these people, why try to worry about an inheritance for your kids at the same time. Any money you have should be available to the guardians, do you want them to go out of pocket raising your children? If I didn't trust someone to be honest in money matters I'd sure as heck never ask them to raise my kids.

I don't disagree with you but some people like separate people in charge. The guardian would ask the trustee for money in that case. It creates a checks and balance system. It works for some. Plus, some guardians may be reluctant to spend the money if they were also trustee so might under spend. Whereas a trustee can force money on them.

 

[ivinsfan]

I don't disagree with you but some people like separate people in charge. The guardian would ask the trustee for money in that case. It creates a checks and balance system. It works for some. Plus, some guardians may be reluctant to spend the money if they were also trustee so might under spend. Whereas a trustee can force money on them.

I don't have a problem with a trustee and a guardian, I was talking about trying to split your money between costs for the kids and inheritance for the kids.It's tricky ,say your guardian has a 3 bedroom house and 2 kids and suddenly needs to care for your 3 kids full time..Who pays for the house upgrade? A van for transpo instead of a car? You really have no idea of the extra expenses a guardian could incur taking care of your family.

 

[CaliKid]

I don't have a problem with a trustee and a guardian, I was talking about trying to split your money between costs for the kids and inheritance for the kids.It's tricky ,say your guardian has a 3 bedroom house and 2 kids and suddenly needs to care for your 3 kids full time..Who pays for the house upgrade? A van for transpo instead of a car? You really have no idea of the extra expenses a guardian could incur taking care of your family.

Oh ya, I agree. I misunderstood.

 

[Brat]

This is what my Mother did for a disabled grandson. Trust Overview | The Arc Oregon

There are doubtless similar programs in other states.

The problem with a young disabled child and estate planning is to make appropriate provisions that are not disqualifying for services.. in an uncertain world.

 

[JohnKeating]

In our plan all the accounts are put in 2 trusts (one special needs and one regular) since they are both minors. Once the typical child reaches a certain age (can't remember the exact age) she will be given direct access to the trust and can spend at will.

Our special needs daughter will never get direct access to the money as that is the point of the trust. There will always be a trustee in place. Beneficiary designation is extremely important here as doing it wrong can be costly.

As for payment/compensation for the guardians when the children are minors that will come through the trustee (This is why we picked a corporate trustee with oversight from a family memeber). No split between inheritance and money for the guardians...all the same with different rules on when/how it'll be given.

Thankfully, our family members are willing to serve in these roles and we've explained the differences and responsibilities to them so I have confidence in them but we still wanted to spread the burden/roles as best we could. But this is why communication is important here to make sure everyone is on the same page.

 

[laurence]

Really, really good info, everyone, thank you. We see the attorney next Friday.