Author Topic: Open a trust for Child #2?  (Read 1338 times)

Hellohi

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Open a trust for Child #2?
« on: March 12, 2018, 10:40:21 AM »
So I opened a trust for my first child, using a trust company who's name I will not mention.  The company has been discussed quite a bit on this forum in the past however most posts have been deleted.  I opened the first child's trust before knowing much about FI and though I was doing a good thing.  And, quite truthfully, probably would not have discovered FI if not for opening that trust and later stumbling upon MMM. 

So now that I have a second child, I am thinking that I need to open the same type of trust even with the known disadvantages of the trust so that both kids are equal.  Does anyone want to talk me out of opening the second trust?

I was thinking of opening the second trust, throwing a little bit of money in it to equal the first child's trust and just let them go. 

Mgmny

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Re: Open a trust for Child #2?
« Reply #1 on: March 12, 2018, 12:42:02 PM »
Why do you need a trust?

If you made the wrong diagnosis the first time, you change the treatment. Don't subject both of your kids to a stupid financial move "to be equal" because you screwed up.

GizmoTX

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Re: Open a trust for Child #2?
« Reply #2 on: March 12, 2018, 01:36:01 PM »
Is the trust revocable or irrevocable?
Trust documents can be worded to include more than one beneficiary. Or, just duplicate the language of the first trust.
What do you hope to accomplish with the trust?
I agree that if you have more than 1 child, you should fund them equally. The distribution amount & timing doesn't have to be.

Disclosure: we set up a irrevocable trust for our son, primarily for but not limited to education. Our primary purpose was to not subject the trust's earnings to the kiddie tax it would have in our return & to exercise control of the assets beyond UTMA age 18. We also set up revocable education trusts for nephews (not brothers), again to control the investment & assets beyond age 18.

trollwithamustache

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Re: Open a trust for Child #2?
« Reply #3 on: March 12, 2018, 02:27:51 PM »
what is equal?

We have step and children together. They will be treated equally as in that we will pay for college. Our youngest has a 529, the others do not. There is plenty of time for the $$s for the youngest to grow tax free. The oldest, not so much, so that is coming out of the stache.

So, while we feel we are treating them the same, I guess if they go widely different priced schools, the cost of treating them "equally" would vary substantially as well.

Catbert

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Re: Open a trust for Child #2?
« Reply #4 on: March 12, 2018, 02:32:12 PM »


Disclosure: we set up a irrevocable trust for our son, primarily for but not limited to education. Our primary purpose was to not subject the trust's earnings to the kiddie tax it would have in our return & to exercise control of the assets beyond UTMA age 18.

I'm guessing this is essentially what you did for child number 1.  If so, I'd do the same for number 2.  Using a different company many years ago DH1 and I set up irrevocable trusts for grandchildren/nieces/nephews (2K each) to be dispersed when they each turned 30.  20+ years later the trusts maturning now are worth over 12K.  Worked out well for us and the recipients.

Hellohi

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Re: Open a trust for Child #2?
« Reply #5 on: March 14, 2018, 04:06:22 AM »
Why do you need a trust?

If you made the wrong diagnosis the first time, you change the treatment. Don't subject both of your kids to a stupid financial move "to be equal" because you screwed up.

Ok. Thanks for the advice my friend. The trust is nice because it give them money for meeting certain milestones in life.

Hellohi

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Re: Open a trust for Child #2?
« Reply #6 on: March 14, 2018, 04:10:07 AM »
Is the trust revocable or irrevocable?
Trust documents can be worded to include more than one beneficiary. Or, just duplicate the language of the first trust.
What do you hope to accomplish with the trust?
I agree that if you have more than 1 child, you should fund them equally. The distribution amount & timing doesn't have to be.

Disclosure: we set up a irrevocable trust for our son, primarily for but not limited to education. Our primary purpose was to not subject the trust's earnings to the kiddie tax it would have in our return & to exercise control of the assets beyond UTMA age 18. We also set up revocable education trusts for nephews (not brothers), again to control the investment & assets beyond age 18.



Irrevocable. Your disclosure is mainly why we did the trust also. And at that time I was pretty bad with money and didnít want to be able  to touch it.

Hellohi

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Re: Open a trust for Child #2?
« Reply #7 on: March 14, 2018, 04:12:24 AM »


Disclosure: we set up a irrevocable trust for our son, primarily for but not limited to education. Our primary purpose was to not subject the trust's earnings to the kiddie tax it would have in our return & to exercise control of the assets beyond UTMA age 18.

I'm guessing this is essentially what you did for child number 1.  If so, I'd do the same for number 2.  Using a different company many years ago DH1 and I set up irrevocable trusts for grandchildren/nieces/nephews (2K each) to be dispersed when they each turned 30.  20+ years later the trusts maturning now are worth over 12K.  Worked out well for us and the recipients.

Yes, same thing. Ok. Glad to hear it worked out. I am leaning strongly toward opening another one. Itís his birthday and I have the money this month so if I do it, now is the time.