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Will and estate planning

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  • Avatar kdeva 
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    My kids are 3 and 1. We are going to meet with an attorney next month for estate planning. I wanted to ask what the forum members who will eventually have high NW do on their will. We are hoping to leave a fraction for charity and remainder split between kids split equally. In case our NW gets above a certain number, we will leave more for charity. My husband doesn’t want to leave the kids with a lot of money since he believes they need to work for their keep. What are people here comfortable leaving for their kids? $1M per kid? $5M per kid? More?

    I personally did not wisen up financially until I was in my mid 30s. So, we decided we will probably want to leave the funds to the kids after they turn 35, say 50% when they turn 35 and another 50% when they turn 45. But, I wanted to know if other have done anything differently here. Of course their college and graduate education will be fully funded by us.

    #226186 Reply
    Avatar kdeva 
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    Follow on question, equal split or unequal split for the kids based on how they are financially doing?

    #226189 Reply
    FIREchief FIREchief 
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    You appear to be describing a trust, which is a good approach for HNW.  Generally, it is better to NOT mandate percentage based distributions but instead allow the adult children to become trustees of their own trusts at a certain age.  This provides asset protection against creditors and divorce.  How best to do this will vary from state to state.  The trusts can be drafted to allow the trustee to have significant discretion with respect to retaining or distributing funds from the trust.  Independent trustees (typically corporate) are expensive and often use sub-optimal investment strategies (either for protection from being sued or for increased profits for their employers).  Please see my signature.

    I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

    #226194 Reply
    Liked by childay
    White.Beard.Doc White.Beard.Doc 
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    We set up trusts with 1/3 of the amount available at each of 30, 35, and 40. I would recommend you make a plan that works well for the next 5 to 10 years, then go back and revise it when the time comes.

    Children tend to be quite different.  Those differences manifest more clearly as they grow up.  One of our children could easily handle a very large inheritance without a problem at a young age.  Another child would have great difficulty and needs that trust in place.

    We set up things to be equal for all, meaning the trust rules and ages are the same despite individual personality and financial management differences.

    #226220 Reply
    Avatar Infinity 
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    Status: Physician
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    Joined: 05/25/2019

    I also set up 1/3 when they reach 30, 35, 40 yr.  However, trust (revocable) offers no asset protection, so I have not put a lot of assets in the trust yet.  When I have more than 22M (haha) or when I am closer to retire, I will transfer more in it.  I think 5M, by the time we pass away, is probably reasonable.

    #226232 Reply
    Liked by kdeva
    jfoxcpacfp jfoxcpacfp 
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    Follow on question, equal split or unequal split for the kids based on how they are financially doing?

    Click to expand…

    If you want to foster animosity among your children, treating them unequally in the LWT is one of the best ways to ensure that you will succeed.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    Hank Hank 
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    Earnest refinancing bonus
    If you want to foster animosity among your children, treating them unequally in the LWT is one of the best ways to ensure that you will succeed.

    Click to expand…

    Nope, give them a vacation house instead of cash.

    #226345 Reply
    Liked by Roentgen
    Avatar StarTrekDoc 
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    Good you’re thinking now.

    First. Term life insurance at least 20 years to cover you both sufficiently for your family plans and needs.

    Onwards…
    Probate sucks if you’re in an unfriendly state. That matters in trust funding over a simple will.

    Equal parts. No favoritism from the grave.

    Ladder the release to your likings. This WILL change as they grow older. Revisit trust rerms in teenage ages and again in their 20s.

    If you dont fund the trust. Its useless.

    #226366 Reply
    Liked by PhotonsRGR8, kdeva
    Avatar Tim 
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    Status: Accountant
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    Joined: 09/18/2018

    “If you dont fund the trust. Its useless.”
    If your kids are useless at 25, It’s useless.
    With you gone, when they reach 30, 35, 40 yr do you think they will change?
    Sometimes kids surprise you, both good and bad.I can guarantee thoughts of a controlling parent will come up sometimes. A gift with strings attached.

    #226378 Reply
    Avatar StarTrekDoc 
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    Joined: 01/15/2017

    @Tim- two different issues. You are mixing funding vs actual trust dictates. One doesn’t pertain to the other.

    If one goes through the trouble of setting up a trust and doesn’t fund it….its a waste.

    If one doesn’t believe in strings attached, trust still has very good reasons to be used over a will. Probate protection in unfriendly states, protection from step family decisions and dilution is another very common issue.

    #226379 Reply
    Liked by kdeva
    FIREchief FIREchief 
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    Asset protection!  Anybody can be sued for anything and half of all marriages end in divorce.  The rest is just gravy…..

    I am not a lawyer, accountant or financial advisor. Any advice or suggestions that I may provide shall be considered for entertainment purposes only.

    #226381 Reply
    Liked by kdeva
    Avatar kdeva 
    Participant
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    Posts: 50
    Joined: 04/21/2018

    I wanted to say that I just read the book “Beyond the Grave” and it is comprehensive and covers both the legal and pragmatic aspects. I highly recommend it if anyone else is wondering about this.

    #234757 Reply
    Liked by Hank
    Avatar stellardoc1 
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    Status: Physician
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    Joined: 07/21/2016

    Silly question – what is the usual net worth when forming a trust makes sense?

    What are the usual parameters? Costs associated?

    #234767 Reply
    jfoxcpacfp jfoxcpacfp 
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    Joined: 01/09/2016

    Silly question – what is the usual net worth when forming a trust makes sense?

    What are the usual parameters? Costs associated?

    Click to expand…

    Not silly, but not a simple answer. What kind of trust? There isn’t a ROT such as the question of when to incorporate.

    Johanna Fox Turner, CPA, CFP, Fox Wealth Mgmt & Fox CPAs ~
    http://www.fox-cpas.com/for-doctors-only ~ [email protected]

    #234774 Reply
    Avatar JBME 
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    Status: Spouse
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    Joined: 03/26/2018

    Silly question – what is the usual net worth when forming a trust makes sense?

    What are the usual parameters? Costs associated?

    Click to expand…

    I would say forming a trust makes the most sense when you know you’re done having kids, not based on net worth. The reason I’d wait until you are done having kids is it can minimally cost a few hundred dollars to make a change (I’ve been quoted at $500-$600). We just set ours up this year, as we’re done having kids. NW is under $500k right now. Through my work we have a benefit to get certain legal services for a reduced fee so we got the whole thing set up (including wills, power of attorney, health directive, and tax strategy planning that most here know about) for only $1000 thanks to this service. It would have cost somewhere between $3-4k otherwise, a figure I’ve researched on this site and found to generally be the most likely price

    #234791 Reply

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