Annuity for Estate Planning

[bolt]

Yes, it is rude to go off half-cocked and be critical of a situation with very little facts at your disposal.... you didn't have near enough facts to go on... and you were rude.... not my problem that you can't face the truth.

A parent still parenting and supporting a healthy male son I suspect over 30yrs old.
Bad economic mojo to come for said child imo.
I do not agree. Period.
100:1 still not my problem :: Herd#metoo's or not.
Not my problem.
my insight.

Good luck!

Everyone should agree ......correct? /sarcasm/

 

[bmcgonig]

+1. That's 4:1 now. And this isn't Bolt's first dismissive comment.

+1

Total jerk statement.

 

[bmcgonig]

A parent still parenting and supporting a fine male son I suspect over 30yrs old.
Bad economic mojo to come for said child imo.
I do not agree. Period. I suspect the vast majority snicker.
100:1 not my problem :: Herd#metoo's or not.
Not my problem.
my insight.

Good luck!

Everyone should agree ......correct? /sarcasm/

You don't even have to try being a jerk. You're really good at it.

You can disagree without being so disagreeable.

 

[atmsmshr]

You don't even have to try being a jerk. You're really good at it.

You can disagree without being so disagreeable.

+1

 

[MarieIG]

Has anyone used an annuity in connection with estate planning? I have one adult son (age 30) that I am fairly certain would quickly blow through any inheritance. I’m thinking of splitting his portion of our estate into two buckets, an immediate distribution that he could use to help buy a house or other major purchases (or pay off debt); with the balance of his portion (about 2/3 of his overall portion) funding an annuity to give him lifetime income. Is it possible to buy an annuity for someone in their 30’s? Pro’s and con’s? Any tax implications?

First of all, I think it perfectly appropriate for you to make reasonable plans for your son's future. Not all of us have children who are perfect in every way. Yes, the way you structure the inheritance does have tax implications however, it the option is your son blowing through his inheritance in short order, or having an income for the rest of his life, the tax trade-off might be well worth it.

The key is that your son does not have the power to alienate the principle. That is why the "spendthrift" trusts are so popular.

 

[MarieIG]

The OP's 30-year old son, along with most folks, are likely to blow through a large inheritance, lottery winnings, or pro athlete's earnings in less than a decade. If the son is not a LBYM person, then I can totally understand the father's intent.

But if the 30-year old son is a fully functional adult, I would consider some education...if the OP's son isn't open to that, or doesn't act on that, then the trust idea is probably the best option. I'd set it up with an initial lump sum (say, for house or starting business), then have 3.5%+ annual distributions set up thereafter, depending on the total value.

I would agree this, to the extent that the trustee have the power to determine whether the son gets the lump sum and the timing of same. For example, OP may not want the initial lump sum to go to son's first ex; or (potentially) son's second ex. He may not want it to go to satisfy a debt, i.e. credit cards, which could be discharged in bankruptcy. There are ways to structure trusts.

BTW, I have six kiddos. Thus far, 4/6 are very budget conscious. My oldest is a blow-that-dough kinda guy, (and I mean ALL that dough) but will probably be ok by virtue of his fiancée having gotten him a government job with a pension and benefits, and SHE being fiscally responsible.

 

[OldShooter]

A parent still parenting and supporting a healthy male son I suspect over 30yrs old.
Bad economic mojo to come for said child imo.
I do not agree. Period.
100:1 still not my problem :: Herd#metoo's or not.
Not my problem.
my insight.

Good luck!

Everyone should agree ......correct? /sarcasm/

I am not a fan of the "Ignore" function, but in your case I have made an exception. Based on several posts, my opinion is that you will never say anything that is of value or is interesting to me.

 

[bolt]

I am not a fan of the "Ignore" function, but in your case I have made an exception. Based on several posts, my opinion is that you will never say anything that is of value or is interesting to me.

Thats unfortunate.
Ask yourself does the son have a disability? A personality disorder? Struggles academically? Or simply unmotivated? Enabled? Likely to choose a bad career? or is he already a planner banking on moms funding?

Feed a wild animal and it becomes a dependent.

Many follow the prevailing party line, I do not.
Regularly subsidizing children's lives, all their lives, particularly 30yrs old and older is nonsense imo.

The best thing my parents ever did was pay for whatever education I qualified for.
As no doubt you're aware most higher education schooling these days will take whom ever will pay the outrageous costs.
I cite recent celebs buying their kids way into colleges. Whatever.
The best thing I ever did was start working at McDees @ 14*.

The OP acknowledged the best advice: research the many trusts available.
Best wishes......

 

[pb4uski]

You obviously missed post #7 in this thread where the OP elaborated on his concerns.... which by the way have nothing whatsever to do with your speculation on the OP's motivation.... you have totally misread the situation. I agree with OldShooter... it is hard to imagine that you will ever contribute anything of value. Good riddance.

 

[harley]

With regard to the OP, I agree about the trust. I've been planning to do one due to spendthifty SiL. By being more flexible it gives you more control.

With regard to the other aspect of the thread, please don't feed the troll. Opinions are welcome. Rudeness is low class. The ignore button is powerful.

And IME when you feed a wild animal you usually lose fingers.

 

[txtig]

OP here. I’m starting to regret posting this question. I thought it was a simple question about options for estate planning. Didn’t realize it would spiral downward with a lot jumping to conclusions and false assumptions.

For the record, I am not providing support to DS. He manages to scrape by and does not ask us for money. I do wish he would make better decisions, both financially and with respect to life in general, but I accept now that he has his own way of thinking, and there’s really nothing I can do to change that.

Thanks to everyone who offered constructive comments.

 

[Red Badger]

OP here. I’m starting to regret posting this question. I thought it was a simple question about options for estate planning. Didn’t realize it would spiral downward with a lot jumping to conclusions and false assumptions.

For the record, I am not providing support to DS. He manages to scrape by and does not ask us for money. I do wish he would make better decisions, both financially and with respect to life in general, but I accept now that he has his own way of thinking, and there’s really nothing I can do to change that.

Thanks to everyone who offered constructive comments.

Not your baby. One gutter snipe can't shut the proverbial trap. Good riddance as well.

 

[lem1955]

We have four grown children and three grandchildren, two of whom are older than 21. Our Revocable Trust leaves our estate to all seven, rather than the parents first. The oldest of the grown children has proved to be wise with money. The other three grown children are on their own but have had more trouble managing money. The grandchildren are young but have made very good decisions so far. Our Trust gives each of them a low six figure lump sum (enough to fund a decent house purchase) then there are payouts to our favorite charities, then the Trust stipulates anything remaining would be paid out over a 10 year period. The oldest has flexibility to change that if need be. We didn't really consider using an institutional trustee, but may make that change in the future if concerns about family dynamics increase.

 

[yorick]

There is an interpretation that I would have if my inheritance was in structured payments, "Thanks Dad, even in death you won't let me make my own decisions."

I get it if the descendant is pre-college age, but at 30 the frontal lobe is fully formed.

Just one guys perspective here.

I have been pondering how to handle inheritance. First, my kids aren’t owed an inheritance. Nor am I. If it turns out that my own inheritance is “nil”, I’ll shrug and move on. Obsessing over material things feels a bit petty, as a response to a parent’s death.

So then - trust or not? We are, sadly, not on speaking terms with the eldest. Offers of mediated dialogue have been made and rebuffed. So there, it’s pretty much whatever we decide we do.

With the younger, we have a good relationship. He struggles with money and “adulting”, and a lot of that has to do just with how his brain works. That said, he can definitely make his own decisions. I think with him, we will sit down and have that discussion. Rather have structured payouts? A lump sum up front? A smaller sum up front, then structured payments after?

He knows what it is like to rob Peter to pay Paul. A sort of “UBI” may actually appeal to him, because no matter what, he’ll have enough for a roof and food.

So that is, I think, how we will approach this: By fiat for the eldest, unless communication improves drastically; and with a series of discussions with the younger.

 

[pb4uski]

^^^ You're generous.... I don't know if I would leave anything to a child I was not on speaking terms with and had rebuffed offers of mediation... I might skip and leave something in trust for the grandchildren.

 

[yorick]

The idea of a trust for grandchildren is a good one. There aren’t any grandchildren, yet, but we will definitely consider that should that change.

 

[SnowballCamper]

Decisions...

I have been pondering how to handle inheritance. First, my kids aren’t owed an inheritance. Nor am I. If it turns out that my own inheritance is “nil”, I’ll shrug and move on. Obsessing over material things feels a bit petty, as a response to a parent’s death.

So then - trust or not? We are, sadly, not on speaking terms with the eldest. Offers of mediated dialogue have been made and rebuffed. So there, it’s pretty much whatever we decide we do.

With the younger, we have a good relationship. He struggles with money and “adulting”, and a lot of that has to do just with how his brain works. That said, he can definitely make his own decisions. I think with him, we will sit down and have that discussion. Rather have structured payouts? A lump sum up front? A smaller sum up front, then structured payments after?

He knows what it is like to rob Peter to pay Paul. A sort of “UBI” may actually appeal to him, because no matter what, he’ll have enough for a roof and food.

So that is, I think, how we will approach this: By fiat for the eldest, unless communication improves drastically; and with a series of discussions with the younger.

Yorick,
I think this is a hard decision for most. All my grandparents died either poor, or with just a pension, so there was nothing for my parents to inherit when I was young. As I'm a bit better off than my brother, I expect that he'll get whatever is left, and I'm fine with that. If I wasn't talking to my dad, I would have no expectation of anything, and be quite elated if he left funds for my kids (his grandkids) college in a trust.

That would be great if your youngest has the self awareness to recognize that a structured payout is best for him, and that's what you're inclined to do. Consensus is always more pleasant than conflict. Good luck with whatever you decide.

 

[2177V]

IMO...the big test of a good responsible child is NEVER having to ask a parent for money or to bail them out....either financially or from the slammer.

However, if a parent suspect that their child is irresponsible and may blow his inheritance, then a trust written by a good attorney is the way to go.

I am lucky that my daughter married a great guy but his income is less than what I would like. They ended living in a poor neighborhood but they never asked me for help or money. Since I had resources, I purchased a single story house with 100% cash for my wife and I. I then let my daughter and my son-in-law buy my original house with 100% cash using a seller's financed loan from me. The asset transfer from parent to child involve real estate so my daughter and son-in-law can't blow that asset away as easily.

 

[imnontrad]

I think if he really wanted the money, he could just sell his right to the annuity to someone for a reduced amount.
My aunt set up her will so her money went into a trust. Her adopted son got enough to live on from the dividends (doled out by the trustee, my mother) but the provision was that he got the trust at age 35. The reasoning was that he did not get enough to be able to blow the money when younger and had to work and if he hadn't wised up by age 35, then that's his problem.
Now I also have an aunt who at one time was engaged to a man her father did not like (thought he was just after their money). So he wrote his will that his estate all went into a trust and my aunt could get the dividends only. Then at her death, the trust would be dissolved with the money going to her children, and if no children, the funds go to some charities. Well, my aunt married my uncle instead but the will was never changed - and they had no children of their own. So when she dies, there will be some very happy charities.
Some people also create a trust to be used in perpetuity for post-secondary education (within reason). So you could give 1/2 to your son and then 1/2 in a trust for education which will indirectly help your son since he would not have to save up a lot for any kids but also ensure other generations benefit even if your son is irresponsible. In this case, I would ensure the trust is set up with a trust department at a financial institution as the trustee.