Trust - Late in Life New Spouse

[OldShooter]

Buy an hour or two of an estate attorney's time and discuss this with someone who knows what they're doing. ...

This. SGOTI is not a trusts & estates expert. This is proven repeatedly here on the forum.

One thing to remember, too, is that there are no do-overs on this. By the time problems emerge, you are dead. So you need an advisor with some miles on him or her. Someone who really has been there and done that with multiple estates over at least a decade or two.

 

[Slim11]

You make a revocable living trust. Name your trustees who will oversee the trust wishes are granted. This could be 2 people or one. If you dont have anyone name a lawyer to do it for you. Lay out what you want distributed , how and when. Now you can set limitations, my kids get money for collage , after graduating they get this percent of the trust. Leaving out step kids to me can be unfair depending on when they came into you life, but you can leave them nothing in the trust. You spouse can be left a yearly stipend, and expenses can be mandated to be payed off with the trust money. You can also put clauses in for medical expenses. The idea for the trust is not to avoid probate , but to leave your assits to whom you want to have them and at what age you want them to have it. Leaving 4 million to say an 11 year old could cause a problem, people may try to become thier guardian to access the $$$. Likewise, leaving 4 million to an 18 year old might cause them to spend it all. Trusts avoid much of that. You can't think of everything, but it will give you peice of mind. Remember that all assets will be owned by the trust. So your significant other if on the paperwork for the house, bank account etc, will have to be onboard.

 

[OldShooter]

... Remember that all assets will be owned by the trust. ...

Not necessarily true and actually not a very good idea.

 

[Slim11]

Not necessarily true and actually not a very good idea.

All but your 401ks and the like. Otherwise, why bother with a trust? The trust is to oversee your money, if you dont fund it its useless? So , how about atually explaining what you mean?

 

[OldShooter]

I meant exactly what I said. A trusts & estates professional will fill in the details for you if it becomes necessary at some point.

Counter-example to your belief: Our estate plan creates three testamentary trusts of two types but the majority of the assets pass to beneficiaries directly.

 

[Slim11]

Ok so you use a beneficiary on the account instead of a trust, but that was not what the op was asking for? With the op in mind , and with what I stated, you want the trust in control of the assists to distribute them to the corect people after your gone. Thats the whole point. It sounds like you have no need for that set up. I was targeting the ops question on a how to do it
You took one line out of contex in my reply. Maybe I need to put in a disclaimer? This may or may not applie to you, kust as you may need or not need a trust. And of course you will need to go to a professional to get this done. I never said not to.

 

[Route246]

There is another factor to consider. Children often are waiting for their parents to die in order to secure a paycheck or what they perceive as free money. If you are FI then you cherish that a parent or both parents are living well into their late 90s. If you are not-FI with a large inheritance pending you can certainly develop mixed feelings as to why Mom or Dad have held on for so long. It is the quiet part and seldom said out loud but it happens.

 

[PatrickA5]

Ok so you use a beneficiary on the account instead of a trust, but that was not what the op was asking for? With the op in mind , and with what I stated, you want the trust in control of the assists to distribute them to the corect people after your gone. Thats the whole point. It sounds like you have no need for that set up. I was targeting the ops question on a how to do it
You took one line out of contex in my reply. Maybe I need to put in a disclaimer? This may or may not applie to you, kust as you may need or not need a trust. And of course you will need to go to a professional to get this done. I never said not to.

OP here. I don't think there is a "easy" way to "shield" the money from possible late in life spouses. A prenup would do it, but it's up to the surviving spouse to actually get one. My FIL refused - just saying "don't worry, everything is left to you kids". Another way would be a Irrevocable Trust upon the death of the first spouse - but that really limits the ability of the surviving spouse to control their own money. Also, the majority of our assets are in IRAs which, according to the lawyers we talked to, are always left to the surviving spouse as beneficiary. There's good reasons for that, but if most assets don't go into the trust, then what good is the trust?


There are ways to get the desired result, but we've decided the complexity of getting there outway the unlikely benefit.

 

[Slim11]

OP here. I don't think there is a "easy" way to "shield" the money from possible late in life spouses. A prenup would do it, but it's up to the surviving spouse to actually get one. My FIL refused - just saying "don't worry, everything is left to you kids". Another way would be a Irrevocable Trust upon the death of the first spouse - but that really limits the ability of the surviving spouse to control their own money. Also, the majority of our assets are in IRAs which, according to the lawyers we talked to, are always left to the surviving spouse as beneficiary. There's good reasons for that, but if most assets don't go into the trust, then what good is the trust?


There are ways to get the desired result, but we've decided the complexity of getting there outway the unlikely benefit.

You are corect the IRAs are the killer. Depending on assets, you could split up some of that to be distributed to the kids. A trust, I did mine revocable so you can change it later but upon death ot becomes non revocable, could be made with 2 trustees, one your significant other, or just leave the significant other as a trustee. So, they will have acess to the money almost as needed, and then distribute the rest afterwards. You can also sheild the home this way, it would be owned by the trust and could be lived in by the spouse, maintained by the trust, then left to the children afterwards. It dosen't cover everything, but you can make it so you have a better peice of mind. Addtionally, you could have the trust alogate money to the children during this period, or set up trusts for them at certian milestones. Best to talk to someone, but better yet to understand what you can do before talking it over with a lawyer. I am not a lawyer, I just have no family and a ex wife and 12 year old. My problem was that if the money was left to the 12 year old, a fight may ensue or worse, have to go to the court system to have a guardian apointed for her. This I was told could take years, and banks will not let 12 year olds withdraw $$. So I set a trust up, so daughter and mom could live together, and the trust paying for it all untill my daughter becomes 35. At that point she gets whats left plus my house. I have benchmarks inbetween to assign assets, pay for collage, medical etc throughout the 23 years as well as checks and ballances to make sure no one goes on a spending spree. This was a in case of run over by bus senerio. Is it perfect, no, does it make me feel better , yes. Can they get around some stuff, maybe. But for the most part its better. Plus, if the kido gets older and has her witts about her, I can change it. This will not protect assists from a medical standpoint. So, no free nursing home.

 

[PatrickA5]

You are corect the IRAs are the killer. Depending on assets, you could split up some of that to be distributed to the kids. A trust, I did mine revocable so you can change it later but upon death ot becomes non revocable, could be made with 2 trustees, one your significant other, or just leave the significant other as a trustee. So, they will have acess to the money almost as needed, and then distribute the rest afterwards. You can also sheild the home this way, it would be owned by the trust and could be lived in by the spouse, maintained by the trust, then left to the children afterwards. It dosen't cover everything, but you can make it so you have a better peice of mind. Addtionally, you could have the trust alogate money to the children during this period, or set up trusts for them at certian milestones. Best to talk to someone, but better yet to understand what you can do before talking it over with a lawyer. I am not a lawyer, I just have no family and a ex wife and 12 year old. My problem was that if the money was left to the 12 year old, a fight may ensue or worse, have to go to the court system to have a guardian apointed for her. This I was told could take years, and banks will not let 12 year olds withdraw $$. So I set a trust up, so daughter and mom could live together, and the trust paying for it all untill my daughter becomes 35. At that point she gets whats left plus my house. I have benchmarks inbetween to assign assets, pay for collage, medical etc throughout the 23 years as well as checks and ballances to make sure no one goes on a spending spree. This was a in case of run over by bus senerio. Is it perfect, no, does it make me feel better , yes. Can they get around some stuff, maybe. But for the most part its better. Plus, if the kido gets older and has her witts about her, I can change it. This will not protect assists from a medical standpoint. So, no free nursing home.

Sounds like in your case, you've got things figured out.

I think in our case, we're just going to have to trust each other to get a pre-nup. Perhaps, when the first of us dies, the survivor will revisit the issue of a putting the money in an irrevocable trust.

We meet with our lawyer tomorrow. I'll bring up the issue again before we go forward with updating our estate plans.

 

[Finance Dave]

I started this thread a few months ago. After visiting with several lawyers and learning as much as I could about the issue, in the end, we decided to just update our Wills and not do a trust at this time. We might take a relook in 5 or 10 years. We're both on the same page on what we want the survivor to do to keep the money in the family, so there shouldn't be any problems (hopefully).

You are smart to think of this at this point in time...well done. My dad remarried after us kids were grown, and he left everything to his new wife upon his death. It was done via a trust, and she has not been transparent about what his wishes were. It has strained the relationship between us and her.

I agree that being clear within your wills about where you want things to go should be sufficient.

 

[Trooper]

I started this thread a few months ago. After visiting with several lawyers and learning as much as I could about the issue, in the end, we decided to just update our Wills and not do a trust at this time. We might take a relook in 5 or 10 years. We're both on the same page on what we want the survivor to do to keep the money in the family, so there shouldn't be any problems (hopefully).

Don't wait too long; s* could hit the fan quickly.

We meet with our lawyer tomorrow. I'll bring up the issue again before we go forward with updating our estate plans.

Thanks for starting this thread and would like to hear what your meeting reveals. DW and I are grappling with the same issue and are in analysis paralysis, causing us to procrastinate.

 

[PatrickA5]

Don't wait too long; s* could hit the fan quickly.


Thanks for starting this thread and would like to hear what your meeting reveals. DW and I are grappling with the same issue and are in analysis paralysis, causing us to procrastinate.

Well, after meeting with our lawyer for an hour and a half, I'm more uncertain than ever. LOL!

A revocable living trust doesn't really "solve" the late-in-life spouse problem, even though the lawyer said there could be stipulations inserted stating new spouses can't inherit trust assets. Of course, the main problem with that is the surviving spouse could be talked into revoking the trust entirely.

Also, the IRAs beneficiaries could be changed (like my FIL did).

So, a revocable trust might make it a little more difficult for the surviving spouse to leave the trust assets to a new spouse, but it would still be fairly easy to leave it all to the new spouse.

An irrevocable trust would take care of the problem, but there's a whole new set of issues, like who's the trustee, under what circumstances can the surviving spouse obtain access the trust funds, trust tax returns, etc.

So, we told the lawyer to update our Health Care Directives and POAs while we mull over the Will/Trust issues. Ugh!

 

[OldShooter]

WADR I think you need a better specialist lawyer For example: " ... the main problem with that is the surviving spouse could be talked into revoking the trust entirely. ... " Does not have to be true. Your will could create an irrev trust with assets and an independent trustee. You could even create an irrev trust right now. Your spouse could receive whatever the trust specified and on the whatever schedule the trust specified. Spouse would have no control over the trust or its assets. Some of the other things you said seem a little off to me but IANAL so I won't pick at them.

 

[PatrickA5]

WADR I think you need a better specialist lawyer For example: " ... the main problem with that is the surviving spouse could be talked into revoking the trust entirely. ... " Does not have to be true. Your will could create an irrev trust with assets and an independent trustee. You could even create an irrev trust right now. Your spouse could receive whatever the trust specified and on the whatever schedule the trust specified. Spouse would have no control over the trust or its assets. Some of the other things you said seem a little off to me but IANAL so I won't pick at them.

The paragraph that you pulled that sentence out of was talking about a "revocable" trust. I'm pretty sure a revocable trust can be revoked at anytime.

I later said that an irrevocable trust could be used, but had other issues. An irrevocable trust could certainly solve the issue, but as you state the spouse would have no control over the trust or its assets - which is not something we want. We also don't want an independent trustee doling out the assets to the surviving spouse.

 

[Slim11]

If the trust was just in your name, it is revocable and becomes irrevocable upon your death. Or, you may be abke to list both of you and when the other passes the trust becomes irrevocable. Then make the pther the trustee. Now you can sipulate no money to future spouse or spouses children upon the significant others death. Unfortunately, as many way you chose to protect yourself and wishes, thier are always things we dont think of. It will never be perfect.

 

[Route246]

This is close to an optimal solution but there are probably clever ways around it. I believe my wife and I would be in agreement to this arrangement but it would be nice to have it vetted by a professional to make it even more bullet proof.

In our case our assets are sufficient, our wants and needs are meager in relation to our assets such that becoming a trustee of our wealth when one of us dies is not so daunting as we are older and have pretty much everything we materially desire in life. Even expensive long term care would not really put much dent in the assets at this point.

If the trust was just in your name, it is revocable and becomes irrevocable upon your death. Or, you may be abke to list both of you and when the other passes the trust becomes irrevocable. Then make the pther the trustee. Now you can sipulate no money to future spouse or spouses children upon the significant others death. Unfortunately, as many way you chose to protect yourself and wishes, thier are always things we dont think of. It will never be perfect.