Spendthrift Heirs - What To Do?

[Skitso999]

Idk if this is possible, but if the inheritances could be stipulated to match the NW of each beneficiary (up to $2M each) and then with the remainder of the $2M each buy each a life annuity.

As soon as the ink is dry on this change, have a will reading so they know.

This may give them incentive.

Bad idea?

I'd agree with that, but how about putting it all in an S&P 500 fund, and let them have 1/2 of the appreciation each year? You could have it administrated by a Trust of some sort whose trustee was a trusted friend. You'd need to give them a cut of some kind of course.

 

[davidfin]

Why do you care? You’ll be dead dead dead. It’s their life to do as they please. Attaching strings etc just ensures that your name will be cursed for all eternity.

Seriously, life’s too short to worry about this. Give a gift or don’t. Attaching strings from the grave is way to controlling. And it won’t work.

 

[Route246]

I can speak for myself why I care and I care very much about what happens after we die or become unable to control our affairs and our assets no longer consciously controlled by us.

That said, I have lived too long and seen too many adverse effects that money has on some people. It brings out the worst in people that you would otherwise think the opposite. Money has a way of drawing out latent evil characteristics in people that emerge when there is uncertainty. I have seen friends and family members stop speaking with each other over poorly planned estate settlements.

Look, it happens and happens all too frequently. A friend from college is going through this now. His father is turning over in his grave now because he told all of his kids he did not want lawyers involved so you're all getting the same share.

It all started innocently enough when his daughter, who happens to be a lawyer, took care of her father and basically looted more than her share of his money in the guise of taking care of him.

I can already see that every one of his kids are going to get a dollar out of this as teams of lawyers are chopping up the estate now with verbose filings and counter-filings that obviously
do not come cheap. Once the assets of the estate are drained the lawyers will all walk away and each child will get a dollar. It is inevitable as one of the latest filings said that over 1M has been spent on legal retainers so far and they are not even close to settlement yet.

This kind of opportunistic lawyering gives the profession a bad name. Shame on them but also kudos to them for being so enterprising as to legally extract money from an estate before everyone realizes what is happening. Family court judges are lawyers and I doubt they are going to write precedent that cuts off their source of income when they retire to become estate attorneys.

I don't want anything like this to happen so we are trying to do sane planning while we still have our brain function. Our trust attorney is helping us craft the trust and will documents now. It is not easy to think about capturing all of the contingencies.

This is why I care about something after I am long dead and gone.

Why do you care? You’ll be dead dead dead. It’s their life to do as they please. Attaching strings etc just ensures that your name will be cursed for all eternity.

Seriously, life’s too short to worry about this. Give a gift or don’t. Attaching strings from the grave is way to controlling. And it won’t work.

 

[Texas Proud]

Route... if it is going to create this much problems leaving it to various people then do not leave anything to them...


There is nothing that says you need to leave anything to your kids.. give it all to your church... or some animal shelter or like some guy my mom knew who left his whole estate to build a youth hostel (it has his name on it)...


I know if I though my kids were going to fight over money they would get nothing...

 

[ncbill]

This is a good point. The purpose of most trusts are to protect, not control. You can create a trust and make the beneficiary the trustee and give the beneficiary full control. As long as the money is in trust it is protect against creditors, lawsuit or spouses in the process of divorce.

For somebody leaving material assets, there is really no reason not to leave in trust, apart from the modest cost of setting it up. Income can be distributed to avoid higher trust taxation, or it can be retained in the trust if and when that protection is needed.

For assets to be protected from creditors generally requires an irrevocable trust where someone other than the beneficiary is trustee.

So you ask someone to be trustee or you pay a commercial firm.

There are some states that allow the above but those trusts are very expensive both to setup & maintain.

 

[mickeyd]

Have a good time. Spend as much as you want. Leave them whatever is left.

Ditto

 

[Route246]

That is the nuclear option and we really prefer not to go that way although there is a lot of wisdom in the thinking. We know as of right now only one of the 5 heirs is a little wayward and will need some guidance. The others should be fine but you never know. Early gifting into retirement accounts for each of them might give us an indication.

Regarding the other nuclear option (spending down to zero), we also prefer not to do that because we plan to help out in the case of a dire life-saving medical emergency causes a decision to be made to pay for some big pharma ransom for some life-saving drug not covered by insurance or surgery only available in Europe or other unforeseen life-threatening event. Secondarily, we don't know what our long term care expenses will be which could run into the millions in the worst case and we want to be able to self-fund that if it ever happened. Both of my parents prepared for this but luckily their hospice care lasted many months instead of many years. A cousin was in a coma for 5 years with no advance directive and it devastated her family as nobody wanted to pull the plug.

These extraordinary medical and care expenses are being written into our trust now should we be unable to let our wishes be known for diverting assets towards saving the life of a family member.

Route... if it is going to create this much problems leaving it to various people then do not leave anything to them...


There is nothing that says you need to leave anything to your kids.. give it all to your church... or some animal shelter or like some guy my mom knew who left his whole estate to build a youth hostel (it has his name on it)...


I know if I though my kids were going to fight over money they would get nothing...

 

[topnotcher]

As I was on my morning walk, I realized you should enjoy great all expenses paid vacations with your family/heirs. If you plan on giving (it) to them, then why not enjoy it with them!

 

[pacergal]

As I was on my morning walk, I realized you should enjoy great all expenses paid vacations with your family/heirs. If you plan on giving (it) to them, then why not enjoy it with them!

This is what we are doing.
We have started doing this the past few years. Next year is a BTD trip to Hawaii! First class travel, resort stay. The grandkids love the ocean, so off we go to a nice warm one.

 

[Koolau]

Why do you care? You’ll be dead dead dead. It’s their life to do as they please. Attaching strings etc just ensures that your name will be cursed for all eternity.

Seriously, life’s too short to worry about this. Give a gift or don’t. Attaching strings from the grave is way to controlling. And it won’t work.

Yeah, that's why I suggested charities. No matter what you do, someone - or everyone won't like it. Why not do some real "good" and piss off everyone else? As davidfin suggested, you'll be dead. It sounds like no matter how much money these people have, they'll waste it and end up back where they are or maybe even worse off. You don't owe it to them! Just a thought, so YMMV.

 

[clifp]

I'm not sure the OP is still checking the thread. I have had some recent experiences as the executor of my mom's estate. She left $25,000 for each of her 4 great-grandchildren (ages 17-22) to be used for their college education. The 3 kids from my niece were mostly homeschooled and they are doing fine, but the oldest just got married, and her career paths have changed several times. She is taking a couple of classes at the community college but tuition and books are less than $2,000, so it will take a long time to go through $25K at that rate.

Their new house doesn't have electricity, and in rural WY it will cost $15-20K just to hook up to the grid and they have just enough money to put up a solar panels, but not enough to afford a battery system. Getting them a Tesla Power wall or similar system is hardly an extravagant expenditure.

Meanwhile, there is my nephew's son. The marriage lasted barely a year, mom and son live in upstate NY. The rest of the family is in SoCal, Washington, or Hawaii, so we have little contact with kid. Evidently, he is a lost child, trying college twice, but didn't finish a semester. My sister, their grandmother, convinced me to let him use $10K to replace his car needed for a job.

My mom and I had a number of conversations, before her dementia, about what she want the money to go for. Was a trade school ok? Yes. Was using the money for a car Ok? Yes but only if they used the car to commute to school. At the time all of this made sense to me and I encouraged her to do it.

A year into the process, I know we made a mistake. Giving the money to the kids at age 21 or the parents would have been better. I'd like to close out the estate, one kid isn't going to use the money until graduate school so I may have to keep filing an estate tax return for the next 4 or 5 years. Now I'm doing this for free, but the OP will have to pay an executor to oversee his wishes.

I just saw this in my email this morning and looked somewhat promising for others in similar situations to the OP.

https://pages.e.northerntrust.com/w...t=Closer_Newsletter&axios_adlink=1&stream=top

 

[oldtimer]

I just saw this in my email this morning and looked somewhat promising for others in similar situations to the OP.

https://pages.e.northerntrust.com/w...t=Closer_Newsletter&axios_adlink=1&stream=top

Looks like money maker for Northern Trust Corporation.

 

[youbet]

The first cut to our estate will go towards our 4 grandchildren's post secondary edu. After that slice, the rest will be split down the middle. We want to provide the funds for their education no matter what financial situation their parents may be in at that future point in time when each have completed secondary school.

Why not do that now while you’re alive? I opened 529b’s for each grandkid with their father as contingent owner (in case I die before they all finish college.) I got a nice tax break from Illinois at the time of the funding. Oldest grandchild is a senior majoring in engineering and it’s been simple to pay her way with qualified 529b withdrawals. Since we started funding when she was a baby, there are large LTCG’s all coming out tax free. Thank you Vanguard TSM fund!

It’s been fun to see that approximately two thirds of her costs have been covered by accumulated divs and CG’s being withdrawn tax free.

The next in line is a high school senior and we expect it to work the same.

 

[Sunset]

......

The first cut to our estate will go towards our 4 grandchildren's post secondary edu. After that slice, the rest will be split down the middle. We want to provide the funds for their education no matter what financial situation their parents may be in at that future point in time when each have completed secondary school.

Why not do that now while you’re alive? I opened 529b’s for each grandkid with their father as contingent owner (in case I die before they all finish college.) ......

brett is in Canada, different rules apply, I'm wondering what are the rules?

Correct me if I'm wrong but here I can open a 529 for some relative's kid who is a US resident/citizen, even if the parents have already opened one ?

I think in Canada, there can be only one education plan per child ?

I would like to fund one, for a relative in Canada, but make sure the parent cannot raid the fund in any manner, and of course get the $ back if the kid has no use for it (dies/drops out, etc).

 

[Texas Proud]

Be aware that if you have a 529 it could affect the amount of aid you get from the college...


with my DD they had it empty in 4 years so 1/4 was to be used each year and that meant she did not need any help..

 

[JBTX]

Be aware that if you have a 529 it could affect the amount of aid you get from the college...


with my DD they had it empty in 4 years so 1/4 was to be used each year and that meant she did not need any help..

My understanding is it counts about as much as taxable assets of parents, so not a lot. So if you funded a 529 from parents taxable investment account, it should be roughly a push.

 

[Texas Proud]

My understanding is it counts about as much as taxable assets of parents, so not a lot. So if you funded a 529 from parents taxable investment account, it should be roughly a push.

Not sure if it matters who funds it... I funded my DD and the rep from the college said it would go 1/4th...



My DS qualified for free tuition as I did not make that much... DD is not even close..