How do you plan to protect your child’s inheritance from a bad marriage?

[street]

I been following this thread and the subject has been something I have pondered a lot. With only one son (34) and he isn't married is what I think about also. He has a 6 figure income and has home, land, savings, 401K, pension and has many paid off earthly belongings.
He will get all we own when we die including a ranch. My worry is what will happen to all of the rest, when he passes on if not married or no kids. I know there are options for him and us prior to death but we haven't talked about it.

 

[nancyfrank232]

My worry is what will happen to all of the rest, when he passes on if not married or no kids. I know there are options for him and us prior to death but we haven't talked about it.

Uncle Sam gets it all. Back to the source

 

[brett]

I have no intention to control my assets from the grave.

Once I fall off the perch the game is over. We spend our time on the present. Who knows what others will do in the future. Any financial decisions we make are based on the here and the now.

If one of our children becomes a financial moron or has his or her common sense blinded by love I cannot do anything to help from the grave. They will be on their own, just as we were.

 

[kaneohe]

I been following this thread and the subject has been something I have pondered a lot. With only one son (34) and he isn't married is what I think about also. He has a 6 figure income and has home, land, savings, 401K, pension and has many paid off earthly belongings.
He will get all we own when we die including a ranch. My worry is what will happen to all of the rest, when he passes on if not married or no kids. I know there are options for him and us prior to death but we haven't talked about it.

It goes according to his will/trust. If none, the state laws take over
https://estate.findlaw.com/planning...estacy-if-you-die-without-an-estate-plan.html

Generally they go to the closer relatives in the bloodline.

 

[FANOFJESUS]

Here is what my grandfather's brother did when his daughter married and he did not think it would last. He had a chat with his lawyer. He had a very successful business. Hard working, very canny Scotsman. His daughter's fiance was in med school.

-he bought a house for them to live in. The title was in his name, not his daughter's or her husband's, or joint.

-he provided them with a company automobile. Nothing in either of their names.

Less than two years after med school the marriage was over. SIL kept no assets, no alimony from his wife. NADA.

Not good, but it could have been much worse had he not been on the ball and sought some legal advice.

Sounds good. One could do this several years to see how things are going along.

 

[OldShooter]

Coincidentally this article seems relevant:

My stepdaughter blew through an inheritance and was mysteriously fired from her job — what should we do with our $1.6M estate?

https://www.marketwatch.com/story/m...t-should-we-do-with-our-16m-estate-2019-10-31

This article re-raises a point that I tried to make earlier in the thread: Using testamentary trusts is not just about marriages and divorces. Several here have commented on how wise, trustworthy, beautiful, etc. their children are. This can all be true, but their assets are still in peril due to circumstances completely beyond their control like a judgment due to an auto accident.

... My worry is what will happen to all of the rest, when he passes on if not married or no kids. I know there are options for him and us prior to death but we haven't talked about it.

Well, maybe it would be a good idea to talk about it. Hopefully your estate plan contemplates that he may predecease you. That is more or less the same problem. Have you designated charities as beneficiaries then? Maybe you and he ought to talk about what charities you believe in.

-----------------------------------------------------
Switching gears, I submit the the "controlling from the grave" meme is distorting the dialog here. Certainly it is possible to draft a trust that does exactly that, but there are many situations where a better meme might be "protecting from the grave."

The simplest case might be a special needs trust for a person who cannot live on their own. A direct bequest might result in his/her not qualifying for government aid that they might otherwise get, where a properly written trust can provide money that is supplemental. Depending on the person's mental ability, a direct bequest might also result in a court-appointed conservator being given control of the money.

In our case, "protecting from the grave" means that our son will not receive a seven figure bequest that he has no idea how to manage. He would not be a spendthrift; we don't worry about that, but he is a very open and trusting soul who would be very susceptible to salespeople that he should not trust.

In the case of our grandchildren, "protecting from the grave" means encouraging them via financial carrots to go for as much education as they can while, at the same time, protecting them from the sort of natural spendthrift urges that come from being young.

 

[nancyfrank232]

^ +1

Most people are selfish. They use the phrase “controlling from the grave” in order to recuse themselves from doing any more work than necessary

Especially when they rationalize to themselves that Death will take them off the hook from any responsibility

 

[JustCurious]

If one of our children becomes a financial moron or has his or her common sense blinded by love I cannot do anything to help from the grave. They will be on their own, just as we were.

Exactly. Absent special circumstances, at some point you have to accept that your children are or will become old enough to make their own decisions just as you did. I can understand trying to set up a trust to protect children from the immaturity of youth, but I think trying to control from the grave once the beneficiary of your funds reaches the age of 35 or 40 is just too much.

For all of you that are in favor of controlling your beneficiaries from the grave beyond the age of 35, were you the beneficiaries of such an arrangement? How would you feel if you were the beneficiary of a trust that restricted you from controlling your inheritance beyond the age of 40?

 

[cathy63]

Perhaps a better question is:

How do you protect your money without throwing a wrench into your kid's marriage?

Assuming they seem happily married or engaged, then the new spouse finds out that their darling new in-laws have felt the need to jump through such hoops? If I'm that spouse...ouch - guess those in-laws that just became my family, whom I adore and embrace....don't trust me at all?

If you're going to do this sort of thing, don't tell the kid or the spouse, just be quiet about it, let them find out after you're gone.

Well, I guess I am a spouse who is sort of in this situation. About 15 yrs ago, FIL asked me to read the documents for the trust they were setting up because he said I was named in them and he wanted everyone who was mentioned to know it. So I read the docs and learned that my role would be to act as trustee for my daughter's estate in the event that my husband pre-deceased his parents and then they also died before our daughter reached age 25. I guess my main reaction was to be mildly amused that he thought I needed to know this. I really hadn't ever thought about inheriting money from them (the family talk is all about sentimental heirlooms, not money), so reading the trust docs made me realize in quick succession: that they had a fairly significant amount of money; that DH was in line for a good-sized inheritance; and that if he pre-deceases me and them, I will get nothing, but our daughter will be close to FI at a young age. Once I digested all that, it seemed like the right thing for them to do and it didn't change how I feel about them. I know they've always loved me and I've been blessed to have them in my life for over 30 years.

At this point it's pretty much moot anyway. FIL passed three years ago, but MIL is still going strong; DH and I are still married and happily retired and we don't need an inheritance to stay financially secure; and DD is over 25. If/when DH receives a large inheritance, it's unlikely to make much difference to our day-to-day standard of living. The only time we've really considered it was when we decided to self-insure instead of buying long term care insurance.

DD is not married, but we've talked to her about the fact that she's our only heir and she knows where to find our estate plan if we die at the same time. We have no provisions in our trust or wills to prevent her future spouse from getting half of what we leave her, but I imagine we'll at least make sure she knows that inheritances and income from same are separate property in our state so she can make an informed decision about whether to comingle money or not.

 

[gwraigty]

Exactly. Absent special circumstances, at some point you have to accept that your children are or will become old enough to make their own decisions just as you did. I can understand trying to set up a trust to protect children from the immaturity of youth, but I think trying to control from the grave once the beneficiary of your funds reaches the age of 35 or 40 is just too much.

For all of you that are in favor of controlling your beneficiaries from the grave beyond the age of 35, were you the beneficiaries of such an arrangement? How would you feel if you were the beneficiary of a trust that restricted you from controlling your inheritance beyond the age of 40?

+1

 

[Chuckanut]

We can't protect our children or grand children from ourselves.

In my college day an acquaintance inherited $50k from his grand parents. That's about $325K today. Within a few years he had bought and sold several automobiles util he settled on a new 1972 Corvette. He married a young woman name LaNelle, which made the rest of us guys very jealous. Of course, they had a nice apartment and traveled about skiing, surfing and enjoying the better things of life.

Five years later LaNelle had woken up to what a pompous jerk he was and divorced him. The money was gone, etc. etc. etc.

The #1 Rule of Life strikes again: You Can't Control Other People.

 

[OldShooter]

... controlling your beneficiaries from the grave ...

The reason we disagree is that I don't accept your premise that this is what trusts do. So your straw men are not interesting.

DW was a trusts and estates professional, retiring as a megabank SVP and business unit manager. Through her I have had a front row seat for many, many trust situations. That experience is the basis for my opinion that " ... protecting from the grave ... " is a more appropriate characterization. You have your opinion, I have mine.

 

[marko]

For all of you that are in favor of controlling your beneficiaries from the grave beyond the age of 35, were you the beneficiaries of such an arrangement? How would you feel if you were the beneficiary of a trust that restricted you from controlling your inheritance beyond the age of 40?

I'm now 68 and have been receiving quarterly payments for the past 36 years. I feel just fine about it.

The idea is that it isn't really "my inheritance"; it's a salary of sorts that I receive, set in place by someone who died 40 years before I was born. To be sure, it isn't 6 figures but it does pay a lot of the bills.

Several other relatives also receive this income from a single, centralized fund, so there is no "my money/inheritance" involved principal-wise, but I suppose you could call the quarterly payment an inheritance of sorts.

Again, I'm just fine with the arrangement.

 

[kgtest]

This topic is close to home. My Sis just suffered a massive blow in a divorce.
So that opened my father's eyes to the fact that hardly his own children can be trusted with judgement (after all Sis had poor judgement in marrying said person who snagged all her dough).

Sooo, he is just gifting money for very specific purposes outside of the trust. The trust (and my father) have both stated to plan for 1MM split between all 3 siblings.

At age 50 dad is 80, maybe he steps up his gifts then, or during now and then or never at all. It's all up to him, but we are well informed of what his assets are, as he feels that is a line of protection from the unknown.

It's better to know what your parents had and where they had it BEFORE they pass away, rather than heirs and lawyers trying to misinterpret a trust document or will. But you always want it in writing, and you should communicate it to your children so there is really no transparency issues. Of course each family operates differently.

 

[JustCurious]

The reason we disagree is that I don't accept your premise that this is what trusts do. So your straw men are not interesting.

A straw man is a form of argument and an informal fallacy based on giving the impression of refuting an opponent's argument, while actually refuting an argument that was not presented by that opponent. One who engages in this fallacy is said to be "attacking a straw man".

The typical straw man argument creates the illusion of having completely refuted or defeated an opponent's proposition through the covert replacement of it with a different proposition (i.e., "stand up a straw man") and the subsequent refutation of that false argument ("knock down a straw man") instead of the opponent's proposition.

https://en.wikipedia.org/wiki/Straw_man

I did not replace your argument with a different proposition and then attempt to refute it, I merely offered my opinion which contradicts yours. I think that setting up a trust to control beneficiaries over the age of 35 and after you are dead is "controlling from the grave" and you do not. That is nothing more than a difference of opinion.

 

[nancyfrank232]

I think that setting up a trust to control beneficiaries over the age of 35 and after you are dead is "controlling from the grave" and you do not. That is nothing more than a difference of opinion.

It sounds like “supporting from the grave” to me

You’re just using the “controlling” term in order to support your chosen narrative

In reality you can’t do anything from the grave so either phrase is meaningless

 

[JustCurious]

It sounds like “supporting from the grave” to me

You’re just using the “controlling” term in order to support your chosen narrative

Lol. And you are using the "supporting" term to support your chosen narrative, how is that different?

 

[rodi]

I thought the main purpose of a trust was to avoid probate.... not to control from the grave.

That said - our trust does have payouts based on age... didn't want a minor child receiving a life changing amount of money... and some extra payouts for milestones (college graduation.) A family member is the prime guardian/executor, with 2 back up family members in case she predeceases us. But the end result is the same as if we a) hadn't died or b) had just a will.... College and living expenses during college are covered. The estate is split between our children.

Hadn't considered spouses of kids.... It will be up to our sons as to whether they keep the funds separate, spend on common needs, or commingle it all. They will be adults. If they are bad with money - that's on them... We try to give them a financial education... one seems to be absorbing it, the other, meh.... not so much. But they will receive the same amount when the time comes.

 

[gwraigty]

Perhaps a better question is:

How do you protect your money without throwing a wrench into your kid's marriage?

Assuming they seem happily married or engaged, then the new spouse finds out that their darling new in-laws have felt the need to jump through such hoops? If I'm that spouse...ouch - guess those in-laws that just became my family, whom I adore and embrace....don't trust me at all?

If you're going to do this sort of thing, don't tell the kid or the spouse, just be quiet about it, let them find out after you're gone.

Good question. It gets a bit sticker when there are grandchildren involved. Read my comment directly below.

Well, I guess I am a spouse who is sort of in this situation. About 15 yrs ago, FIL asked me to read the documents for the trust they were setting up because he said I was named in them and he wanted everyone who was mentioned to know it. So I read the docs and learned that my role would be to act as trustee for my daughter's estate in the event that my husband pre-deceased his parents and then they also died before our daughter reached age 25. I guess my main reaction was to be mildly amused that he thought I needed to know this. I really hadn't ever thought about inheriting money from them (the family talk is all about sentimental heirlooms, not money), so reading the trust docs made me realize in quick succession: that they had a fairly significant amount of money; that DH was in line for a good-sized inheritance; and that if he pre-deceases me and them, I will get nothing, but our daughter will be close to FI at a young age. Once I digested all that, it seemed like the right thing for them to do and it didn't change how I feel about them. I know they've always loved me and I've been blessed to have them in my life for over 30 years.

You have indeed been fortunate in this. At least your in-laws fully intended to recognize their granddaughter. How would you have felt if the terms had been for DH's share to instead be divided up among remaining siblings, as if the granddaughter didn't exist? After DH and I inherited about $110K from my father, split 10%/90%, FIL has made it known, several times, that his 3 sons stand to inherit a "significant, substantial" sum of money after he dies. We don't know the amount, not even a ballpark, but he seems quite smug about it whenever he brings it up. I find it somewhat distasteful, the way he dangles it like a carrot on a stick. FIL has no idea that DH and I are already FI. I think it would hurt his enormous pride to know that we're not depending on an inheritance for financial security. His 2 DILs and 4 grand kids will inherit nothing. If one of his sons predeceases him, the remaining sons inherit it all.

FIL knows that DH and his 2 brothers inherited their late mother's share of their grandmother's estate. It was unexpected. DH's grandmother could easily have left her estate to her 2 remaining daughters. FIL knows how much that $60K helped us early in our marriage. It surprises me that FIL wouldn't do the same for his grand kids.

FIL is stingy. Even SMIL says so. When SMIL sold her house, she gave her kids the proceeds outright, so they could use it for college or whatever. (She also didn't want FIL or his kids having any of that money, which is understandable.) In contrast, FIL gives my kids $20 for their birthday and $25 for Christmas. And that is literally all. He sent out an email a couple of years ago, announcing that he was going to stop giving anything to the grand kids soon. FIL is 86, but with the longevity in his family, he could live another 10 years. By that time, his sons might be collecting Social Security themselves! About 10 years ago, FIL inherited a large sum of money from his uncle. He put it in an account in his name only, specifically to be inherited by his sons via POD. So it just sits there, unused. In the meantime, DH's niece and nephew will be struggling under the burden of student loans. It makes no sense to me. FIL got his college paid for with the GI Bill. You'd think he could be generous and pay it forward.

I've thought about posting the following several times, so here it is. Do you know how special some of you truly are? It's wonderful that some of you believe in helping/gifting while you're still around to enjoy the fruits of your generosity. I've spoken to DH about this and said that we should follow your excellent example and not make our kids wait until we're dead, as long as we assure ourselves of not running out of money in our elder years. He agrees.

 

[nancyfrank232]

Lol. And you are using the "supporting" term to support your chosen narrative, how is that different?

No difference

We’re just promoting different narratives

 

[RenoJay]

I plan to talk to the kids when they’re old enough about pre nups and about keeping inherited assets as separate property. If I gift something to the couple (like a down payment) I’d fully expect it to be treated as community property but for the big nest egg I’ll counsel my kids to keep it titles separately.

 

[MarieIG]

+ 1

Smart man
Why did he put SIL on payroll?
If positive outlooks worked we wouldn’t have Wills, Pre-nups or Trusts

Because that made the SIL the wage earner of the couple, and therefore much less likely to get an award for alimony or maintenance.

Under this scenario, at the time the divorce went through, he was the wage owner for several years making it more likely that the daughter may have gotten some temporary alimony, to allow her to get established in the work force, i.e. had she been out of work if there was a young child.

 

[nancyfrank232]

Because that made the SIL the wage earner of the couple, and therefore much less likely to get an award for alimony or maintenance.



Under this scenario, at the time the divorce went through, he was the wage owner for several years making it more likely that the daughter may have gotten some temporary alimony, to allow her to get established in the work force, i.e. had she been out of work if there was a young child.

Grandpa was such a clever man! That’s amazing. Thanks for the explanation [emoji106]

 

[4legsgood]

I think my daughter would be grateful if I could figure out some way to safeguard her inheritance in case of a bad divorce, and not think of it as controlling from the grave.

 

[OldShooter]

I thought the main purpose of a trust was to avoid probate.... not to control from the grave. ...

There are many flavors of trusts. 60, i have read.

A trust to avoid probate is a "revocable" trust, often called a "living" trust by those who sell them. IMHO their popularity is directly proportional to the number of attorneys offering free dinners and intimidating presentations on how horrible probate is. This type of trust does have its purposes however. One common one is to simplify dealing with property in a state other than the decedent's state of residence.

At death, a rev trust turns into an "irrev[ocable]" trust. There are also testamentary trusts that do not really come into existence until they are funded after a grantor's death.

It is the irrev and testamentary trusts that are causing all the heat and light here. The terms of an irrev trust can be simple: "Sell all the assets and give all the cash equally to the kids." Or trust terms can be much more complex, in the extreme some could probably be accused of being attempts to control from the grave. In the middle, where most trusts are IMO, is language intended to financially protect the trust funds from a spendthrift beneficiary or external events like a divorce and possibly to ensure professional management of the assets for future purposes like education and retirement.

"Controlling" and "protecting" are pretty much in the eye of the beholder.