Trigger point for trusts?

[PatrickA5]

One potential use of a trust is to dictate how the funds can be used from beyond the grave. I know of a woman who left her assets in a trust for her 4 kids, with all kinds of restrictions on how the money could be spent (ie. need a new roof for your house? ok. want to buy a Maserati? nope).

Eventually the kids got the courts to grant access to all of the money without the restrictions. I don't know what the process was, but it wasn't quick or easy.

At this point, I don't have much desire to control our money beyond the grave. Our kids are probably going to be in their 40's or 50's by the time the second of us dies. Hopefully the amount they will receive won't be a life changing amount of money at those ages. I'm sure it will help, but we're not talking millions for each kid. I'm sure we'll continue giving much smaller amounts while we're alive. There may not be much left over.

 

[RetiredHappy]

Here's how it can be done wrongly. My ex-husband's grandfather was quite wealthy, had a biological daughter and an adopted son. The daughter married a man whom her father did not approve. On the father's death, half of his estate went to the son and the other half paid $3K a month to the daughter, not adjusted for inflation. It stipulated that when the daughter passed away, none of the money would go to her children, and instead the would be distributed to the children of his son's. It was quite sad because the daughter struggled financially and her children had no contact with the cousins because of animosity over money.

 

[OldShooter]

That's how my deceased sister's trust / estate is setup. To distribute when each of her three kids hits a certain age. That's how she wanted it done.

This is quite common, but there is a pitfall that should be dealt with in the trust language: The trustee should have some discretion to modify or accelerate a payment schedule.

Consider a beneficiary who is badly injured or contracts a fatal disease where it is desirable to hire home health care attendants. The trustee ought to be able to use that person's (or even other beneficiaries') money to deal with the situation. Another scenario might involve a judgment or a divorce where a scheduled payment might end up in the hands of someone besides the beneficiary where delay would eliminate the risk.

An expert trusts & elder law attorney will know how to identify and fix pitfalls like this. A home-made trust ("I don't want to pay no stinkin' lawer.") probably will miss these and similar issues completely.