Should I leave any money for my teenager in my will?

[Boganvillia]

Advice sought: I have three children. Two are toddlers, and one is a teenager, borne from a previous relationship to my current very happy partnership.

I am currently drafting my will and the basic structure is that I will leave everything to my partner. (If he and I die more or less at the same time I would be leaving my estate in trust to the three children and they will each get their share when they turn 21.) In addition to my usual assets, I have a life insurance policy of about $1 million.
 
My question is this: should I leave specific gifts of cash to my children? In particular, how about my 13-year old? If she gets to be say 17 years old, or 23 years old, and I at that point in her life kick the bucket, as matters stand without any such cash gift provision, I am relying on my partner to provide a backstop of good advice and a go-to person in times of trouble, as well as her own father, who is quite good in his own way. But that's it.

She would be on her own as far as carving out a livelihood and establishing herself financially in the world.

Is this a good thing? When I was in my 20s, we used to call kids who were expecting cash funds - expectant heirs, essentially - 'trustafarians', noteworthy for sitting around failing to get their acts together and often as not, smoking a great deal of pot in the process.

Or will she rightly bear a grudge against a mother who certainly had the capacity to leave her a little nest egg, or even quite a large one (the life insurance is enough to spread around, including to my partner for the expenses of raising the toddlers) and yet didn't?

Opinions welcome!!

[Lans Holman]

Is there another family member you would trust to manage the money?  I know if my bil and sil were to kick off, we get custody of their kids but my wife's other sister becomes the trustee of the money.  Then that person can make decisions regarding the money hopefully in such a way that your daughter doesn't just sit around waiting for the cash.

[G-dog]

Seems like you should be able, via your will and/or trust funds, try to cover the scenarios that trouble you the most, and include various contingencies as to what triggers a pay out or not (then the monies either sit waiting for another contingency for that person, or go back into a more general distribution, etc.). You need some expert advice on how to set it all up properly.  This may be an over complicated option -but it is an option.
You want your daughter to have a sense of security vs. entitlement (trustafarian) - I suspect that comes from your parenting skills vs. her simply having the knowledge that there is a trust set up for her.

[Boganvillia]

Well, yes, that's quite a good idea - I could get my partner to be that trustee. I could gift the teenager, say, $100,000 but she gets it in trust, and he's the Trustee ... thanks Lans! (And to cover the alternative scenario in which my partner dies too and the kids all get their third at 21, perhaps I could do some finessing there too along these lines, with another responsible family member as trustee for a fair chunk of the funds.)

[Boganvillia]

... and yes, good point G-Dog, that the sense of entitlement is affected not only by these structures, but by parenting skills applied more broadly.

[bogart]

I don't know how old you are now, but surely your 23-year old daughter isn't going to be sitting around hoping you kick the bucket soon, no matter what's in your will?

I'm more or less in your shoes (my little one's in elementary school and DH's 2 adult kids are 30-somethings, so not exactly, but close enough).  We prioritized providing for our little one and ensuring that DH has a comfortable retirement (if something happens to me, I am less concerned about the flip side of that given our age difference and different retirement circumstances not really relevant here) but also wanted to provide something to his adult children (when we wrote our wills, their situations were less stable/foreseeable than they are now, because of course the adult kids, though adults, were younger then and less established). 

I'd assume you might well rewrite your will once your toddlers reach adulthood, anyway -- and at that point your DD will be about the age of our "bigs" but hopefully you'll still be alive and kicking with many years to enjoy ahead of you. 

We definitely don't have our LO getting his funds at 21; I think it's spread out over 25-30-35 (fractions at 25 and 30 and the rest at 35) and otherwise, stays in trust (though with a family member as trustee whom we trust to exercise good judgment about how much, or little, discretion a then-young-adult should have in having access to that money.  Hopefully, at 21 (etc.) our LO will be wise beyond his years, but if he's orphaned we'll have no way of judging that, so I preferred to set up a structure that provides some insulation against a -- late maturation.

[MayDay]

We have ours set up to give the kids enough money for college and a beater car, but they don't get large amounts of money all at once.  It is set up by percentages I think, but something like all expenses as needed (and as approved by a financially savvy relative who is the trustee, ie no crazy spending) for college.  Of what remains, 25% at age 25, 25% at age 30, 25% at age 35, 25% at age 40.  The hope being that by the time they get the later money they will be responsible with it and use it wisely. 

Obviously I hope they will be responsible with the early money as well, but given 2 close family members who would blow through a trust in a month, we didn't want to take that chance.

[StarryC]

I'm older than your oldest child.  I am pretty self sufficient and my parents aren't wealthy.  However, from the age of 17 until now, they have helped me financially in many ways: Help starting an emergency fund, help with a down payment on a car, co-signing for my first grown up apartment, help with medical expenses when I was uninsured, help with rent when a job I had didn't pay me on time (while I looked for a new one), money for college applications, SAT etc. fees, a place to live during the summer of college etc.  Obviously every parent doesn't do this, and plenty of people survive without these things.  But, plenty of people also go into credit card debt to survive these things.  You have the ability to help her avoid that. 

I'm sure the other parent would continue to do much if not all of that.  However, I think you should leave something to ease that.  Her life would be harder if you weren't there to help ease the transition to adulthood.  I think that some small amount with some instructions could go straight to her: $10,000 for use in buying a reliable car, as an emergency fund, or for paying the first last and security on that first non-college apartment. 

Another factor is how comfortable is she with your new spouse and vice versa?  It's easy for you to say now that of course your spouse would help her, but would your daughter even ask?

[Tai]

If you want your children to have any money from your estate then leave it to them directly, use a trust or whatever method you like.

[Boganvillia]

I think yes, StarryC and MayDay, you are right and I should leave her something directly. Say $10k up front, and then a larger lump sum in a trust account to be doled at at five-yearly intervals. And I do take your point about the teen not necessarily feeling ok about coming to my partner with her troubles StarryC; they do have a good relationship now but who can tell about later on, and look, sometimes you really just want a blood relative in your corner.

Has been great crowdsourcing here :)