Author Topic: Help us craft our will  (Read 1413 times)

damyst

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Help us craft our will
« on: April 07, 2018, 02:58:41 AM »
My wife and I are trying to be responsible adults and prepare a last will. We hope to stick around for another 4-5 decades, but you never know.

The main considerations are guardianship for our 3-year-old son (this part we have figured out), and handling of assets.
Our stash will all go to our son, and it ought to be enough to support him to adulthood and through college, with money to spare.

In a case like this, people often set up a trust with rules for doling out funds, to limit the risk of mismanagement. We spoke with the lawyer who'll be preparing our will, hoping they can give us a formula, or at least best practices for setting up these rules. Instead, all we got was "it's totally up to you." We've never done this before, and hopefully never will again. So I'm asking y'all instead.

My instinct says something like this: come up with a rough estimate of annual expenses that the guardian would incur for raising our son. Pad it generously. Release that amount each year. Add a clause to fund any college related expenses, within reason (we got this idea from the lawyer). Release a lump sum unconditionally at age 20. Release whatever is left at age 30.

Anyone done something like this? What does your plan look like? What do you think of the plan described above?

Perspectives from fellow Canucks would be particularly valuable.

Freedomin5

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Re: Help us craft our will
« Reply #1 on: April 07, 2018, 04:44:20 AM »
Fellow Canuck here.

The problem with your plan is what if there’s an enexpected large but necessary expense during one of those years? Do you expect the guardian to cover anything outside of the typical living expenses?

Our will goes something like this:

If I die, DH gets 60%, and DD gets 40% in trust of the guardian, who is DH.
If DH dies, I get 60%, and DD gets 40% in trust if the guardian, which is me.
If we both die, it all goes to DD, in trust of the guardian, who is my mom and whom we would trust with our lives...or in this case, DD’s life. Honestly, sometimes I think she loves DD more than she loves me, her own daughter. :D

The trustee, who can be different from the guardian, ensures that funds are not mismanaged or misapplied (used for non-DD-related things).

Obviously, you may have to do this again in the future, once your child is grown. How sad would it be if your grown son had to wait for handouts from his 90-year-old named guardian.

Your lawyer shouldn’t have told you “It’s up to you.” Our family lawyer walked us through the whole process, posited different options, and then helped us analyze what would be best in our case. She didn’t tell us what to do, but she did present us with the different common structures/options, and then let us make our own decision.

If you’re in the Toronto area and are interested, feel free to PM me, and I can ask if she wants to take on a new client.


« Last Edit: April 07, 2018, 10:24:59 AM by Freedomin5 »

Cranky

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Re: Help us craft our will
« Reply #2 on: April 07, 2018, 05:20:56 AM »
Yes, I think the lawyer should be laying out more options for you.

When we did new wills recently, which were very simple as our kids are grown, the lawyer gave us a million scenarios to try out.

Personally, I'd set it up so that there's a modest annual payout to the guardian (which is the hard decision) until college, and then college costs, and then control of the remainder at 30 or 35.

AMandM

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Re: Help us craft our will
« Reply #3 on: April 07, 2018, 01:09:29 PM »
We are in the middle of making our wills, and we are taking a different tack.  When we are both dead, everything goes to the kids, split equally (per stirpes if you care), with the two oldest as guardians if the youngest are still minors. 

This might not work for all families, but we can trust the guardians to use the money responsibly. Rather than try to predict what their expenses might be and when they might need extra, we are leaving it to them to arrange. Our kids all get along really well and have shared fundamental priorities, so it is reasonable for us to expect they will help each other make good decisions.

damyst

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Re: Help us craft our will
« Reply #4 on: April 21, 2018, 03:00:15 AM »
Thank you to those who responded so far. I'm still interested in hearing people's asset disbursement formulae.

Roadrunner53

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Re: Help us craft our will
« Reply #5 on: April 21, 2018, 05:41:59 AM »
My hub and I need to redo our wills. When we originally did it, the year was around 1991. All of our parents have passed and were in the will. I am an only child and the hub isn't close to 2 out of 3 brother/sisters.

We had originally left small token amounts to the brother/sisters. But a huge fall out makes that less desirable. One sister that we are are still in touch with has plenty of money and has worked for a premier company for close to 30 years. Her hub is self employed and works constantly.

Hub wants to make new wills and I do too. We have willed most of our money as it stands now to Animal Welfare in our town. I would like to have that money, once we croak, into a trust where the interest on the money would be drawn off annually to the organization so it would last a long time and they could count on that money each year to help the animals.

However, we never know what life will throw us and nursing homes are the worst case scenario for sucking your bank account dry.

Sibley

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Re: Help us craft our will
« Reply #6 on: April 21, 2018, 07:19:39 PM »
Read through the inheritance thread. Aside from the entertainment value, you might get some ideas of what not to do.

https://forum.mrmoneymustache.com/antimustachian-wall-of-shame-and-comedy/inheritance-drama-you-got-any-stories-wanted/

mxt0133

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Re: Help us craft our will
« Reply #7 on: April 21, 2018, 10:30:35 PM »
We are in the middle of making our wills, and we are taking a different tack.  When we are both dead, everything goes to the kids, split equally (per stirpes if you care), with the two oldest as guardians if the youngest are still minors. 

This might not work for all families, but we can trust the guardians to use the money responsibly. Rather than try to predict what their expenses might be and when they might need extra, we are leaving it to them to arrange. Our kids all get along really well and have shared fundamental priorities, so it is reasonable for us to expect they will help each other make good decisions.

The issue that I have with leaving the money to the guardian is it is legally their assets now.  Even if you trust them 100% to honor your wishes, if they were ever to encounter financial hardship or be liable for an accident, then the assets that is supposed to take care of your kids are in jeopardy.   Another scenario is if the guardian gets married and then divorced, again the assets that was supposed to be for your kids might be split in half.

This is the main reason not to give the guardians the assets for your descendants and the main reason to put it in a trust, so that no matter what might happen to the guardian or executor of the trust, the assets in the trust are untouchable.  It is more expensive to setup up and manage, assuming you pay the executor of the trust, but if you are talking about FIRE level assets it should not be a significant portion of the assets you are leaving behind.

dragoncar

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Re: Help us craft our will
« Reply #8 on: April 22, 2018, 03:23:56 AM »
To craft a will you need one PEN, twenty PAPER, a WRITING DESK, and the LEGALESE skill.

AMandM

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Re: Help us craft our will
« Reply #9 on: April 23, 2018, 04:18:48 PM »

The issue that I have with leaving the money to the guardian is it is legally their assets now.  Even if you trust them 100% to honor your wishes, if they were ever to encounter financial hardship or be liable for an accident, then the assets that is supposed to take care of your kids are in jeopardy.   Another scenario is if the guardian gets married and then divorced, again the assets that was supposed to be for your kids might be split in half.

Sorry, I don't think I was clear. The money will be the property of the minor children, but we have specified which adult would be in charge of them and have signing authority on the accounts. I don't think this makes the assets the guardians' property, though we haven't had our final visit with the lawyer.

In our particular case, our youngest is 14, so the chances are very low that we will both die with minor children. Even if we do, they'll be old enough to see what is being done with their money.  The guardians are financially and maritally and mentally stable, so the chances are even lower that within the next four years both of us will die, and the guardians will fall into a situation that would present them with overwhelming temptation to defraud their siblings, and that the other siblings won't intervene to help make them do right. I realize the chances of disaster like that are never zero, but we're willing to live with the risk.

mxt0133

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Re: Help us craft our will
« Reply #10 on: April 23, 2018, 06:28:52 PM »

The issue that I have with leaving the money to the guardian is it is legally their assets now.  Even if you trust them 100% to honor your wishes, if they were ever to encounter financial hardship or be liable for an accident, then the assets that is supposed to take care of your kids are in jeopardy.   Another scenario is if the guardian gets married and then divorced, again the assets that was supposed to be for your kids might be split in half.

Sorry, I don't think I was clear. The money will be the property of the minor children, but we have specified which adult would be in charge of them and have signing authority on the accounts. I don't think this makes the assets the guardians' property, though we haven't had our final visit with the lawyer.

In our particular case, our youngest is 14, so the chances are very low that we will both die with minor children. Even if we do, they'll be old enough to see what is being done with their money.  The guardians are financially and maritally and mentally stable, so the chances are even lower that within the next four years both of us will die, and the guardians will fall into a situation that would present them with overwhelming temptation to defraud their siblings, and that the other siblings won't intervene to help make them do right. I realize the chances of disaster like that are never zero, but we're willing to live with the risk.

So you assets are going to a custodial account because minor children cannot legally own the assets until they are 18 if it is not in a trust.  Just be aware that your children will have full access to the assets at 18, which is a lot of responsibility at such a young age.

GizmoTX

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Re: Help us craft our will
« Reply #11 on: April 23, 2018, 07:53:01 PM »
Minors cannot inherit. Your wills can set up testamentary trust(s) that only get created upon your death. The trust(s) should be flexible & say something along the lines of your trustee "may" (not "will") distribute funds necessary for the support, health, or education of your child(ren). We did not want our child's guardian to be the same as the trustee, & we named backups for each, in case our primary choice couldn't or wouldn't serve. You should provide the guardian some separate funding for their effort.

Our wills provided for 3 different scenarios: one parent dies, both parents die, the entire family dies. For one parent dying, we left everything to the other without creating a trust for children. If the entire family dies, leaving no immediate survivors, then each parent's will leaves his or her half to respective relatives & other heirs or charities. If the second parent or both parents die, then the testamentary trust is created with a trustee & a guardian appointed. We delayed any trust remainder payout, with a portion paid upon college or trade school graduation & any remainder at age 30.