Trusts, legal planning, who takes the kids

[laurence]

So DW and I have been scolded for not setting up our legal documentation yet if the worst were to happen to us. We have a good reference now and I'm sure she'll answer most of our questions but does anyone have advice or experience they'd like to share? Our oldest has special needs (Down Syndrome) and is almost 12, the other two are 9 and 5. We know who we'd name to take the kids (and backups). Anything we should keep in mind that we may not be thinking about? Any particular questions you were glad you asked the lawyer? Thanks, and sorry if this has been beaten to death, tried the search function and didn't get any obvious hits.

[Dash man]

Ask about setting up a special needs trust. This should shield your child from any reduction of government aid from having too much of their own assets.


Enjoying life!

[MichaelB]

Quote:

Originally Posted by laurence We know who we'd name to take the kids (and backups).

Have you discussed with them and secured their agreement?

[CaliKid]

Ask about continuing trusts for the two younger kids. Do not distribute outright at 25 or 1/2 at 25 and 1/2 at 30. Hold in trust for life, pay life insurance to the trust too, and make the kids their own trustee at an older page. This gives them protection from themselves (at the younger ages) and possibly protection from creditors (including divorcing spouse) at an older age. In fact, see if your attorney offers this option. Of course a special needs trust for your eldest. Name lots of back ups for everything. In California I would think you would spend around $3,000 for the full package. If they are substantially higher or lower than this I would get a second opinion. A good resource, in California, is the State Bar of California list of attorneys who are Certified Specialist in estate planning. You can search in your county on the state bar website. Good luck.

[Teacher Terry]

We made sure we had enough life insurance $ so that if something happened whoever was taking care of the kids would not be financially burdened.

[growing_older]

Quote:

Have you discussed with them and secured their agreement?

In some families, this can be problematic. You don't want to cause friction by naming one relative, and implicitly not-naming others, when in all likelihood you will not die while the kids are still minors and all the planning is just for an unlikely case. Of course you still want that case covered, but it may or may not be worth the upsets that can result from making it known who you choose.

For a special needs guardian, this may be more difficult and you may need to make sure that your chosen individuals are willing to serve.

[ivinsfan]

Why would you not talk to the people you want to take care of your children? And why would everyone need to know what's going on?

A simple Thank you for agreeing to do this and let's keep it between us and not discuss it with others should be more then sufficient.

[DrRoy]

Have you provided for medical power of attorney in case one or both of you are not able to communicate or make decisions? Also, what instructions do you have?

[laurence]

Quote:

Originally Posted by ivinsfan Why would you not talk to the people you want to take care of your children? And why would everyone need to know what's going on? A simple Thank you for agreeing to do this and let's keep it between us and not discuss it with others should be more then sufficient.

This is exactly how we handled it. It's actually close friends and we agreed to take care of their kids (we are 2nd behind his twin brother). No family, either too elderly or too untrustworthy!

Medical power of attorney is on the to do list as well.....

[Sarah in SC]

So glad you are taking care of this!
Definitely set up plans for a special needs trust for your oldest, preferably with an outside trustee (my boss is trustee of one set up for his young cousin).
Our wills set up two trusts, one for sister's kids and one for brother's. My sister's husband is trustee for both. The remaining estate after other bequests and life insurance are evenly divided between two trusts, which are to be used for HEMS (health, education, maintenance, and support) until youngest is 25, then the balance will be distributed to those beneficiaries.
And of course the usual: health care POA and living will. We also have a codicil for our roommate to remain in our home to care for animals, for a period of 10 years, with the estate paying for maintenance and utilities and veterinary care. He is also responsible, in exchange for a yearly stipend, to maintain the property and prepare it for sale at the end of that period.
Again, so glad you are working on this now. And don't forget that you will need to revisit the process when any major changes take place in your life. Wills are not one and done over a lifetime.

[mpeirce]

Everyone always say to set up a special needs trust. That's not always the best course of action. Make sure you lawyer discusses both the pros and cons of the situation with you.

We also have a special needs child and have not set one one for him. They can be expensive and also can be complicated given certain family situations.

Rather, we are leaving our estate to his two siblings. They are trustworthy and know they are to set aside a portion of their inheritance to assist their brother as need.

[Bamaman]

Quote:

Originally Posted by mpeirce Everyone always say to set up a special needs trust. That's not always the best course of action. Make sure you lawyer discusses both the pros and cons of the situation with you. We also have a special needs child and have not set one one for him. They can be expensive and also can be complicated given certain family situations. Rather, we are leaving our estate to his two siblings. They are trustworthy and know they are to set aside a portion of their inheritance to assist their brother as need.

The chances are that you'll need to redo your estate planning a number of times as your children get older. And attorneys that specialize in trusts and such specialized law are somewhat rare. Getting good advice on special needs children is difficult to obtain, too.

I had a cousin with Downs Syndrome and a mother that was unable to care for him. Blake spent much of his life in the state's care until they went out of the mental health business. Then Blake was placed into the care of Volunteers of America, a wonderful non-profit organization. Blake lived his last 30 years in a tri-plex with two other gentlemen, and he went to a day-care center during the day. He was very happy, and was very well cared for until we lost him at age 62.

Blake received social security disability and a VA benefit that more than paid for his care at Volunteers of America. In fact, he had too much money in his account, and V/A had to buy big screen tv's and really nice furniture to keep his liquid assets down to meet standards.

In order for Volunteers of America to care for Blake, he could never be left his just inheritance. His mother died 2 years ago at age 99--a year after we lost Blake--so we never had to cross that bridge.

So some circumstances require that special needs people be formally excluded from estates. We're fortunate that we the family had the financial resources to care for him--but were never needed. And Blake was never a burden on his brother, cousins or anyone while he lived a very long and full life.

[CaliKid]

Quote:

Originally Posted by mpeirce Everyone always say to set up a special needs trust. That's not always the best course of action. Make sure you lawyer discusses both the pros and cons of the situation with you. We also have a special needs child and have not set one one for him. They can be expensive and also can be complicated given certain family situations. Rather, we are leaving our estate to his two siblings. They are trustworthy and know they are to set aside a portion of their inheritance to assist their brother as need.

I would say this is good and not as good advice. The good is to not always jump to a special needs trust for a special needs child. Each situation is unique and they are right to not just jump for special needs.

The not as good is relying on siblings to do the right thing. Unfortunately I have seen way too many times where this doesn't work out. People die unexpectedly and out of order, people develop drug/gambling/etc... addictions, people can be married to horribly overbearing people who get them to do the wrong thing with the money, and the list goes on.

The key is talk to an experienced estate planning attorney who knows the pros and cons of special needs trusts.

[mpeirce]

Quote:

Originally Posted by CaliKid ...Each situation is unique... The not as good is relying on siblings to do the right thing. Unfortunately I have seen way too many times where this doesn't work out.

As I said, consider the pros and cons. Each family needs to look at it's own circumstances to make a decision.

If a special needs person has adult siblings who are living good lives and care about their disabled sibling - and are willing to step up - I don't see any reason to not rely on them.

[Dash man]

Quote:

Originally Posted by mpeirce As I said, consider the pros and cons. Each family needs to look at it's own circumstances to make a decision. If a special needs person has adult siblings who are living good lives and care about their disabled sibling - and are willing to step up - I don't see any reason to not rely on them.

Until something happens in their lives where they can't/won't help any longer.


Enjoying life!

[SumDay]

We had "4 Cylinder" clauses in our trust when the kids were younger. They had to get approval from the trustee to buy a vehicle, and it could be no bigger than 4 cylinders. I think we had that end at age 30. No Maserati for you!

[sheehs1]

Quote:

Originally Posted by Teacher Terry We made sure we had enough life insurance $ so that if something happened whoever was taking care of the kids would not be financially burdened.

+1

Just talk with someone who was asked to be a Godparent. My friend asked them if they had insurance that would follow the kids. She was told no. She turned them down.

[laurence]

Quote:

Originally Posted by sheehs1 +1 Just talk with someone who was asked to be a Godparent. My friend asked them if they had insurance that would follow the kids. She was told no. She turned them down.

Yeah we're trying to figure out the right split on assets to help the new guardians vs. inheritance for the kids once they are adults.

It's a strange sort of....relief of anxiety as the typical kids pass each birthday. Yes I'll miss them being tiny, but the fact that my 9 year old is very mature and half way to adulthood now in some ways lowers the stress level.

DW and I used to have much more life insurance, but we've receded a bit - I should buy some more as my work provided is 3xSalary and going part time will drastically reduce that benefit.

[Sarah in SC]

Just to be clear, the godparent role is that of a mentorship, in a spiritual or moral way, and not legal guardianship. The terms should not be interchangeable. I imagine sheehs's friend did the right thing by turning down a role that muddled the two!

Laurence, I think the best idea is to leave your estates as a pool of money to be used for specific needs while the kids are minors, and whatever is left would be given to them as adults (but at least wait until they are 25 or older). Something to consider is to have the legal guardian and the trustee for the funds be different people. Another consideration is the relative wealth of the folks you are granting guardianship. What you don't want is a situation where your kids are "wealthy" and their own kids have more modest means at their disposal. Like yours go to private school or fancy soccer camp but the guardian can't afford the same for their own children. If you choose someone without kids of their own, it is a bit less complex.

[laurence]

Quote:

Originally Posted by Sarah in SC Just to be clear, the godparent role is that of a mentorship, in a spiritual or moral way, and not legal guardianship. The terms should not be interchangeable. I imagine sheehs's friend did the right thing by turning down a role that muddled the two! Laurence, I think the best idea is to leave your estates as a pool of money to be used for specific needs while the kids are minors, and whatever is left would be given to them as adults (but at least wait until they are 25 or older). Something to consider is to have the legal guardian and the trustee for the funds be different people. Another consideration is the relative wealth of the folks you are granting guardianship. What you don't want is a situation where your kids are "wealthy" and their own kids have more modest means at their disposal. Like yours go to private school or fancy soccer camp but the guardian can't afford the same for their own children. If you choose someone without kids of their own, it is a bit less complex.

Good points, our closest friends have very similar parenting styles and philosophies, that was essential to us. Childless couples were never a consideration, talk about a crash course in having no life and possibly resenting the kids! The primary choices are actually better off than us, part of my large hiatus to this board is my personal circle was a bunch of grad degree LBYM types so I got my fix on the weekends anyway. I came back because we've moved on from the "save everything you can invest wisely and try not to think about how long you have" phase and I have to learn new things!