Comments on: How our Estate Plan is Structured

By: Walt Padabney

Walt Padabney — Thu, 30 Aug 2007 16:42:27 +0000

I think that is a pretty good plan.. Particularly the age band vesting… But, would sit down with the kids when they are old enough or Write a letter to them in the event that you don’t survive to that age, explaing why they should continue to keep those assest segregated and invested inside of the trusts… Protection from Creditors, Preditors, Inlaws and outlaws. Any money they don’t need to spend should stay segregated so they don’t become community or Common property… just incase a spouse doesn’t turn out to be what they expected… A little eductation goes a long way in keeping your hard earned estate within your bloodline..

By: MITBeta

MITBeta — Mon, 23 Jul 2007 19:20:37 +0000

@RootAnn: “(A specific charity might be good now but what will they be like in ## years?)”

If you’re still following this thread: keep in mind that a will is a living document, not a create once and forget about it. So pick the charity you like now and if when you next revise your will you have a different thought about the charity, make a change.

By: My Financial Journey

My Financial Journey — Wed, 07 Feb 2007 19:03:42 +0000

I’ve been putting off the whole will/trust thing too and hopefully I get my butt in gear soon. My goal is to have it setup before our 2nd child is born this summer.

Anyway one quick question that I have always wondered about. How is the money “invested” while waiting to be dispersed. Obviously this will be a size able portion of money and I think it would have us all rolling over in our graves if it was sitting in a money market account earning sub-par return.

By: karla (threadbndr)

karla (threadbndr) — Fri, 26 Jan 2007 21:19:23 +0000

Since we have an only child, the trust situation was a little simpler initially, but more complex when we considered grandchildren (son is nearly 21 and is looking at rings with the girlfriend).

We also have a payout in stages.

When I revamped my will, PoAs ect, after Walt’s death, it was about $500. Those are midwest prices for a straightforward will and trust.

My lawyer is a member of our church and I paged for him when he was in the political arena. His partner is my parent’s lawyer, so the decision was easy.

By: RootAnn

RootAnn — Fri, 12 Jan 2007 15:36:26 +0000

Actually, nickel, we don’t want the estate plan to pay for the kids college tuition. If we were alive, we wouldn’t be paying for it. We don’t want them sponging if we’re dead. They can pay of loans when they get their share of the money when they are older, but they aren’t going to get it paid for upfront. So, we don’t have that worry.

By: nickel

nickel — Tue, 09 Jan 2007 20:45:48 +0000

Thanks for sharing your approach, RootAnn. The reason we split it when our youngest hit 21 was that otherwise the younger kids would end up subsidizing the college tuition of our oldest (his tuition would get paid out of joint trust, but their tuition would come out of their individual trusts). As I noted, if you split it later as opposed to sooner, then you need to be careful to build in flexibility for disbursing funds to the eldest in case they need it for ‘grownup’ stuff. This is why we built in the deduction of advance payments for our older kids if they need funds before the split happens.

By: RootAnn

RootAnn — Tue, 09 Jan 2007 20:13:52 +0000

We did our estate plan a few years back similiar to this ($500), but we split the trust when the OLDEST was 21. There might be a really big age span (now six yrs, but we aren’t done having kids yet) between oldest & youngest so we’ll have to debate the pros/cons of your way vs. our current way. One side note – we added a strange side benefit for our (family member/friend) trustee – a small % bonus of the total trust amount to be handed out when the trusts were split. We think it’ll give some incentive to keep it growing. (Of course, we also had to make sure there was a check/balance in making sure he wouldn’t be a miser in doling out the necessary expenditures for the kids.)
Our biggest debate was what happened if the whole family died together? We still haven’t figured out where the money will go. (A specific charity might be good now but what will they be like in ## years?)
Dan: We asked for recommendations from trusted (older) friends. The lawyer who set ours up was great. We’ve sinced moved and the lawyer we went to for something else was a bust. Make sure you feel comfortable with them and they come recommended!

By: Miguel

Miguel — Mon, 08 Jan 2007 23:38:00 +0000

@ Dan – I had wills, life insurance trusts, power of attorney, healthcare proxy, etc. done a few years ago and the initial tab was around $3500. I too was surprised at fivecent’s low bill. However, ours was fairly complex, especially with setting up charities and customizing the trusts. Maybe fivecent’s paperwork was mostly fill in the name standard boilerplate.

FYI, I’m in NYC and our attorney was an estates specialist, so that may also have something to do with the costs. That said, we are not happy with the subsequent service we have gotten (long story) and are looking to change, so if anybody has a NYC recommendation, I’m all ears. Yet further proof that price does not always equal a better product.

By: Dan

Dan — Mon, 08 Jan 2007 23:01:59 +0000

Any comments on how you go about finding an attorney to handle this? We just had a baby, so we need the whole ball of wax – wills, estate planning, power of attorney, medical directives, and so on. Are their attorneys that do all of this in one shot? In all honesty, your $600 quote was much less than I would have expected.

By: Miguel

Miguel — Mon, 08 Jan 2007 22:17:56 +0000

Thanks for the follow-up. We are to be the guardians of my BIL’s kids if anything happened to them. So, not only are we trying to tie down our own estate plan, which is fairly complicated, but also work with him to insure that his plan will owrk for his kids and for us too. I had not even thought about adoption, but I’ll have to give that some thought to that as well. Bottom-line, while I would do anything for BIL’s kids (we’ll likely end up helping them with college anyhow), I also don’t want to be the recipient of an ill-planned situation that would severely impact my own finances – at least to the degree this can be avoided with some forsight. Some difficult discussions ahead for the family in general.

By: nickel

nickel — Mon, 08 Jan 2007 20:11:18 +0000

Sure, it’s possible that trust might be exhausted before the kids hit adulthood. In our case, I think that’s unlikely, but it’s always possible. We also know that the guardians intend on adopting our kids if anything were to happen to us, so I would imagine that a substantial portion of the associated expenses would be absorbed into the ‘family budget’ (that’s what we would do). But our estate will be sizable enough to take care of huge one-off expenditures such as college.

By: Miguel

Miguel — Mon, 08 Jan 2007 20:02:43 +0000

Thanks FiveCent,

I am redoing our estate plan right now and wondering the best way to leave money to kids when they are a wide span of ages. This has given me some food for thought.

One question: Isn’t it possible that the guardians might need to use the bulk of the trust in the process of raising the kids before they turn 18. How much flexibility does the guardian/trustee have? How much of their own money would you expect the guardian to use towards raising your kids?

By: nickel

nickel — Mon, 08 Jan 2007 04:16:14 +0000

Yes, it would be simpler to split it upon death.. The problem with doing it that way, however, is that it removes flexibility. If, for example, one of our kids ends up having (say) expensive medical problems (or other special needs), their share could be end up being totally tapped out before they ever came of age. If we were alive when this happened, my wife and I wouldn’t count these costs against that child’s future inheritance, so it doesn’t seem right to create that possibility in their absence. The deduction of advance payments only kicks in when they’ve come of age.

By: Matt

Matt — Mon, 08 Jan 2007 04:10:13 +0000

Just out of curiosity, why did you decide not to simply split the trust balance four ways at your death, and then administer the four seperately? That seems like it’d be simpler, and avoid having to worry about the need to deduct advance payments to each child from his pro-rata share of the final split. That’s the plan for my fiancee and I…when/if we have kids, that is.

The money my fiancee contributed to paying for our house (and all the money for the house she used to live in and is now selling) came out of her inheritance from her grandfather, so we’ve spent quite a bit of time recently dealing with trust issues. (Each living grandchild got half a million dollars in cash, and a 1/4 share of his land holdings. He died in 2005, and she, her brother, and her two cousins just got the land deeds and the last of the cash this week.)

By: NCN

NCN — Mon, 08 Jan 2007 02:03:04 +0000

THIS is a good post! Informative, well-written, to the point… My wife and I have Wills but you’ve “inspired” me to go to my attorney and go the “extra mile”… Great stuff,
NCN

By: nickel

nickel — Sat, 06 Jan 2007 02:48:08 +0000

The total bill was $600. The wills and trust were $450 (that covered both my wife and my self) and the powers of attorney, etc. ran another $75 for each of us. We actually found a guy that would do the wills for $100, but I didn’t get a good vibe from him, and I’m not interested in cutting corners when it comes to things like our kids’ future.

By: SAM

SAM — Fri, 05 Jan 2007 18:56:49 +0000

How much does it cost to set something like this up?