Author Topic: Trust Fund Baby or Searching for FI?  (Read 3230 times)

TFB

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Trust Fund Baby or Searching for FI?
« on: February 27, 2019, 05:37:42 PM »
Hi, Mustachians!  I am looking for a bit of direction and help.  I am 35 years old, married with a kid, and am the trustee and beneficiary of an irrevocable trust (generation skipping trust) which my dad set up in 2012 to take advantage of estate tax laws at the time.  The trust currently has $2.4 Million in assets which are invested in stocks, bonds and CD's.  Outside the trust, my wife and I have a net worth of $500k which makes our combined net worth $2.9 Million.  Our annual after tax income is $75k and we have $60k in expenses. 

If we include the trust in our net worth, the simple math says that we have currently reached FI.  Should I even include the trust assets in my FI calculations?  I currently do not take any income from the trust and don't want to but that could possibly be my pride and wanting to make it on my own.

Although we currently bring in more money than we spend, we would like to buy a home in the next few years as our family grows which will increase our expenses by $10k to $20k each year.  My dilemma and question to you is this: Does it make sense to start taking income from the trust to pursue my passions or should put my head down and continue working hard at my current job to increase our income (possible side hustle as well)? 

My dad is the hardest working, most generous person I know so I don't want to be seen as lazy and simply living off the fruits of his hard work, especially since he's busted his ass to provide for us.  It is of course only because of him that I'm even in a position to consider the fruits of FI. 

Any help and advice would be greatly appreciated!

-MIT (Mustachian In Training)

ender

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Re: Trust Fund Baby or Searching for FI?
« Reply #1 on: February 27, 2019, 05:55:28 PM »
What do you think your father (or grandfather? whoever's money is in the trust) would react?  In my opinion it would be difficult to take money from a trust setup by a living grandparent if the grandparent disapproved.

It's unclear to me what "pursue my passions" means too.

Our annual after tax income is $75k and we have $60k in expenses. 

 we would like to buy a home in the next few years as our family grows which will increase our expenses by $10k to $20k each year.


Where do you live that it would be $80k/year for a family of 3? Perhaps you can optimize your spending and get both without needing to draw much from the trust at all.

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #2 on: February 27, 2019, 06:56:25 PM »
Thanks for the reply!  Great questions.  I'm not too sure what my father would say and while I have control of the trust assets, you're right, I wouldn't want to take money out without his approval so I don't want to completely leave the work force. 

Pursuing my passions include traveling and helping others in need (specifically a non-profit that helps people out of poverty).

My family lives in San Diego so a median home here would cost $591k or about $3k in monthly housing costs.  We have really focused on cutting our expenses this last year and continue to do so.  Thanks for the advice!

terran

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Re: Trust Fund Baby or Searching for FI?
« Reply #3 on: February 28, 2019, 06:26:49 AM »
It sounds like trust distributions are at your full discretion and you have full control over how it's invested? If that wasn't the case I wouldn't want to rely on it as it could be taken away without your control, but since it is I would consider it the same as your own money while considering the unique tax considerations.

While you dad is alive, you should talk to him about what you want to do. While it sounds like you can do whatever you want, it sounds like you respect him a lot, so you shouldn't risk that relationship by using "his" money to do something he wouldn't approve of. After he passes, do what you want without guilt though.

If you continue to work you might at least consider taking out enough to max your tax advantaged accounts and replace that income from the trust as that will be more tax efficient. Maybe make them Roth as that would help if you continue the legacy and pass them on to your kids.

FIRE@50

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Re: Trust Fund Baby or Searching for FI?
« Reply #4 on: February 28, 2019, 06:34:09 AM »
With the caveats that others have mentioned about respecting the wishes of your living family members, I would retire and live a frugal Mustachian life. Volunteer and take up those passions that you mentioned. If you do that, I would guess that when you die, the trust will have more money in it then, than it does today. I don't think that would upset anyone and it would honor the legacy that you have been given.

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #5 on: February 28, 2019, 09:34:37 AM »
It sounds like trust distributions are at your full discretion and you have full control over how it's invested?

Yes, I have full discretion since the trust is irrevocable and I am the trustee.

Great feedback and suggestions.  I have been looking into tax efficient investments within the trust.  I'm not sure if it's best to hold tax-free municipal bonds or ETF's that track the market so I have a mix of both in the portfolio.

I had not thought of taking money out of the trusts to fund IRA's each year but will plan on doing so.  This past year we were not able to put money into a Roth IRA because of the income limitations but will look into systematically doing Roth conversions in lower income tax years.  Thanks terran!

Scotland2016

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Re: Trust Fund Baby or Searching for FI?
« Reply #6 on: February 28, 2019, 09:42:40 AM »
Can you buy a house that stays in the trust?

terran

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Re: Trust Fund Baby or Searching for FI?
« Reply #7 on: February 28, 2019, 09:43:23 AM »
I have been looking into tax efficient investments within the trust.  I'm not sure if it's best to hold tax-free municipal bonds or ETF's that track the market so I have a mix of both in the portfolio.

With the high balance and the accelerated tax brackets a trust is subject to, it seems likely that doing anything a high income person would to reduce taxable income for the trust would be wise. The trade-off, of course, is that those types of investments often underperform, but higher your tax bracket, the bigger a difference having preferential tax treatment makes.

Stock index tracking ETFs are generally pretty tax efficient with lots of good options at most of the major brokerages. Stay away from mutual funds unless they're Vanguard (due to a patent that make them more tax efficient than other company's mutual funds).

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #8 on: February 28, 2019, 10:18:22 AM »
Can you buy a house that stays in the trust?

Yes, I thought about purchasing the home through the trust but it seems that by doing so we would not able to exclude $500k in capital gains once we sell the home so instead I've thought of borrowing against the trust for the purchase.  With that said, I'm open to other suggestions.

iris lily

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Re: Trust Fund Baby or Searching for FI?
« Reply #9 on: February 28, 2019, 10:28:11 AM »
With the caveats that others have mentioned about respecting the wishes of your living family members, I would retire and live a frugal Mustachian life. Volunteer and take up those passions that you mentioned. If you do that, I would guess that when you die, the trust will have more money in it then, than it does today. I don't think that would upset anyone and it would honor the legacy that you have been given.
yep, this.

I assume this do-gooder non-profit is already formed, dont risk your own funds. Still,  that board of directors may look to you to be a board member if youíre not already and to bring in significant assets to their cause.

I am a board member on  a very small board for a nonprofit and every single member on that board has significant assets, some with many millions.  They view the organization as self funding. I write a check now and then but itís never more than $1000.
« Last Edit: February 28, 2019, 10:33:45 AM by iris lily »

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #10 on: February 28, 2019, 10:36:20 AM »
Stock index tracking ETFs are generally pretty tax efficient with lots of good options at most of the major brokerages. Stay away from mutual funds unless they're Vanguard (due to a patent that make them more tax efficient than other company's mutual funds).

Yes, I've stayed away from mutual funds as they pass along capital gain distributions at the end of the year.  I'm not aware of Vangaurd's patents but this sounds worth looking into.  The municipal bonds pay 3.5% so their tax-equivalent yield in the trusts would be 5.8%.  I've contemplated dumping the whole amount into an ETF tracking the market (SPY, VTI, SCHB, etc) but can't quite get myself to pull the trigger.  I know this can be better than dollar cost averaging but am nervous to put the whole amount in at once so I have about a 50/50 mix of munibonds and ETF's at the moment.  Based on my age maybe I should allocate more to stock ETF's and maybe I'm playing it too safe but don't want to take too much risk on dollars that were a gift.

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #11 on: February 28, 2019, 10:53:37 AM »
I assume this do-gooder non-profit is already formed

Yes, this non-profit is already formed and I'm involved a bit but would love to dedicate more time and energy to it as this is where my heart is.  However, I can't overcome the feeling of needing to be the provider and feel that using the trust (someone else's money) as my income source is a cop out for not working hard like my father.

terran

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Re: Trust Fund Baby or Searching for FI?
« Reply #12 on: February 28, 2019, 11:13:13 AM »
Stock index tracking ETFs are generally pretty tax efficient with lots of good options at most of the major brokerages. Stay away from mutual funds unless they're Vanguard (due to a patent that make them more tax efficient than other company's mutual funds).

Yes, I've stayed away from mutual funds as they pass along capital gain distributions at the end of the year.  I'm not aware of Vangaurd's patents but this sounds worth looking into.  The municipal bonds pay 3.5% so their tax-equivalent yield in the trusts would be 5.8%.  I've contemplated dumping the whole amount into an ETF tracking the market (SPY, VTI, SCHB, etc) but can't quite get myself to pull the trigger.  I know this can be better than dollar cost averaging but am nervous to put the whole amount in at once so I have about a 50/50 mix of munibonds and ETF's at the moment.  Based on my age maybe I should allocate more to stock ETF's and maybe I'm playing it too safe but don't want to take too much risk on dollars that were a gift.

The patent just lets them treat their mutual funds as a share class of their ETFs (I think that's right?) which means they don't have to make capital gains distributions in the same way. Investing in other companies ETFs would be approximately the same, so the only advantage is if you really want the features of a mutual fund like not having to worry about limit orders and whatnot.

It sounds like you've done the math on the municipal bonds. I wouldn't necessarily dump bonds for stocks entirely, especially if you do end up quitting paid employment making the trust your primary source of income. You might find this whole series, but this post in particular useful in exploring asset allocation in relation to the withdrawal stage: https://earlyretirementnow.com/2017/09/13/the-ultimate-guide-to-safe-withdrawal-rates-part-19-equity-glidepaths/

MrThatsDifferent

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Re: Trust Fund Baby or Searching for FI?
« Reply #13 on: February 28, 2019, 11:50:02 AM »
Hmmm, Iím going to sound more judgey than I mean, but here goes: Iím a bit concerned that youíre trying to be mustachian in training while having your spending at $60k and being home $75k. That suggests your saving rate is quite low. You seem to be conscious that youíre not particularly great at money, hence your hesitation to take from the trust. It feels like your concern is that youíre not worth cause youíre not as good at it as your dad and if you access it now, you might mess it up and drain it.

I think you should trust this instinct. You donít seem ready. My advice: forget that you have the trust for now. Look at how you can optimize your current life. Youíre both 35 but have a combined income of $75k, that seems quite low. Are you not passionate about advancing your career or growing your income because of the trust? No one needs to work longer than they want, but you do learn quite a bit about drive, focus and dealing with people the more you push yourself up the ladder.

What is causing your expenses to be so high? Do a case study (donít mention the trust) and see what you can do to reduce that.

Once you actually develop stronger financial management skills, then Iíd look at some formal learning (possibly an MBA) solely focused on how to run the charity as best as possible. In 10 years time, youíll have almost 5 million to manage.

Youíll also want to teach your kids skills so they donít become reliant on this. Reread MMMís posts, he talks about having the giving pledge for his kid so the child knows he wonít inherit the money and will need to develop his own. Donít let this trust and the idea of it make you soft, build your financial muscles and prove to yourself that youíre truly ready for such a responsibility. You donít seem there yet, but reaching out proves youíre ready to start. Good luck.

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #14 on: February 28, 2019, 12:14:35 PM »
The patent just lets them treat their mutual funds as a share class of their ETFs (I think that's right?) which means they don't have to make capital gains distributions in the same way.

That's very interesting, thank for sharing!  I see some benefit in having the capital gains and dividends automatically reinvested in the portfolio, especially if I am not taking this as income but have avoided MF's due to their passing the capital gains along so I'll have to take a look. 

Also, thanks for sharing ERN's article!  I've heard him speak on a few podcasts but have not read this article.  I'll check it out.

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #15 on: February 28, 2019, 01:19:42 PM »
Iím a bit concerned that youíre trying to be mustachian in training while having your spending at $60k

Thanks for the feedback and advice!  This is why I am in training and have not reached the mustachian level yet.  I will definitely do a case study to get feedback how I can reduce our expenses.  When my wife was working, we had an income of $200k so our savings rate which much higher.  She stopped working last year when our baby was born as she wanted to stay at home with our baby so our savings rate was cut in half.  I'm not at all opposed to advancing my career and bettering myself but feel my time and energy might be better off investing in others lives and helping others rather than focusing on myself (bettering my career just to make more income).

The reason I do not want to take from the trust is not that I feel that I am not good with money but instead that I want to respect my dad and his strong work ethic.  By spending so much time at work, my dad provided so much for us.  However, by doing so he sacrificed his health and ability to travel and enjoy retirement to his fullest.  While I respect that he worked so hard to provide so much for his children, I value spending time with my family and enjoying life more than acquiring more wealth.  Obviously, there is a balance and quitting the work force to just kick back and do nothing would be an insult to my dad, myself, and my family.  This balance is what I'm trying to figure out.  I want to use this trust as a blessing and not a crutch.  In the past, I have buried the trust in my mind as I did not want it to be a demotivator but recently I have changed my perspective a bit.  The Bible speaks of The Parable of Talents "Matthew 25:14-30" and I want to put the trust assets to best use and not just "bury" them.

Annie101

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Re: Trust Fund Baby or Searching for FI?
« Reply #16 on: February 28, 2019, 06:27:48 PM »
Why not discuss this with your dad?  I like the idea of focusing on doing good for others if your dad supports the idea.  It seems like you could discuss your ideas and your reservations with him.  He may be all for it.

Annie101

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Re: Trust Fund Baby or Searching for FI?
« Reply #17 on: February 28, 2019, 06:30:52 PM »
Also, I don't think he would have set up the trust if he didn't want you to use it.  Could have donated the money...

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #18 on: February 28, 2019, 08:13:11 PM »
Also, I don't think he would have set up the trust if he didn't want you to use it.  Could have donated the money...

You have very good points! I have spoken with him about the trust and how he would like to see these assets best used and his response is that we have done well with what we have been given. I think he trusts us to put the money into use how we see best fit. You bring up a great point which is just asking my dad how he feels about me accessing the trust for income while I pursue other passions. While Iíve tried to have this conversation in the past, i think I could be a bit more direct inasming for his blessings.

zygote

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Re: Trust Fund Baby or Searching for FI?
« Reply #19 on: March 01, 2019, 09:12:54 AM »
The reason I do not want to take from the trust is not that I feel that I am not good with money but instead that I want to respect my dad and his strong work ethic.

You've brought up this point a few times, that you want to respect your father's work ethic and if you quit or slow down you're not working hard like he did. This doesn't quite make sense to me. You don't want to use the trust to sit around the house and do nothing. You want to continue working hard, it's just to help a nonprofit instead of to obtain a high salary for yourself. Why is it that you feel like it's only hard work if it results in more money?

I'm not necessarily saying this so you quit everything right now, just to give you something to think about as you make your plans.

Car Jack

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Re: Trust Fund Baby or Searching for FI?
« Reply #20 on: March 01, 2019, 09:52:41 AM »
I think I get where you're coming from.  You don't want to do things that your dad will be disappointed in.  I'm older than you (62) and my mom has helped a lot in recent years with education for our kids and other unexpected, large expenses.  We've mentioned that I wanted to retire at 62 some years ago and she thought it was a silly idea.  She worked in the family business into her 70's.  Knowing her thoughts (and my wife agrees, but that's another story....she doesn't think we could retire if we had $100M saved), I've decided that I won't be retiring for at least several years or until she passes.  You might decide something similar and perhaps only take small amounts from the trust for specific, good reasons like putting into retirement funds or to help with a down payment on a house purchase.  I think you'll be ok with your dad unless you end up buying a McLaren or something like that.

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #21 on: March 01, 2019, 12:56:05 PM »
You want to continue working hard, it's just to help a nonprofit instead of to obtain a high salary for yourself. Why is it that you feel like it's only hard work if it results in more money?

Thatís correct. I guess I feel this way as thatís the environment I was raised in.

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #22 on: March 01, 2019, 12:59:48 PM »
I think I get where you're coming from.  You don't want to do things that your dad will be disappointed in. You might decide something similar and perhaps only take small amounts from the trust for specific, good reasons like putting into retirement funds or to help with a down payment on a house purchase.  I think you'll be ok with your dad unless you end up buying a McLaren or something like that.

Great feedback. Thank you!

MrThatsDifferent

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Re: Trust Fund Baby or Searching for FI?
« Reply #23 on: March 01, 2019, 01:09:13 PM »
I think I get where you're coming from.  You don't want to do things that your dad will be disappointed in.  I'm older than you (62) and my mom has helped a lot in recent years with education for our kids and other unexpected, large expenses.  We've mentioned that I wanted to retire at 62 some years ago and she thought it was a silly idea.  She worked in the family business into her 70's.  Knowing her thoughts (and my wife agrees, but that's another story....she doesn't think we could retire if we had $100M saved), I've decided that I won't be retiring for at least several years or until she passes.  You might decide something similar and perhaps only take small amounts from the trust for specific, good reasons like putting into retirement funds or to help with a down payment on a house purchase.  I think you'll be ok with your dad unless you end up buying a McLaren or something like that.

Huh? What? Youíre letting the opinion of your elderly mother determine your working years (at 62 no less) because you donít want to disappoint her!?! WTF?  Thatís some weird co-dependency right there. No, be stronger than that. You only have one life, your mother has been living hers, you live yours. Sheesh.

MustacheAnxiety

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Re: Trust Fund Baby or Searching for FI?
« Reply #24 on: March 01, 2019, 03:18:58 PM »
What are you doing for work now and how do you feel about it?  If you hate it, talk to your wife and quit now.  If it is alright, Kick the can down the road for 18 months. Set up your retired life before you retire.  Mostly buy your house and see what your expenses are for a year or so.  Make sure your Dad is happy with the decision (it sounds like he will be). 

Even though you don't need to keep working, it seems to me that you would get a feeling of accomplishment from being the sole bread winner for a time: supporting your family, knowing you could do so indefinitely, and knowing you are buying a better life for them or others by working a little more.


TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #25 on: March 01, 2019, 06:08:03 PM »
What are you doing for work now and how do you feel about it?  If you hate it, talk to your wife and quit now.  If it is alright, Kick the can down the road for 18 months. Set up your retired life before you retire.

Great advice! I work in finance and itís alright. I feel like Iíd be fine working in this industry for a few more years but donít like the thought of doing this long term. Ideally, Iíd love to create a business that provides a bit of income and flexibility just for my personal satisfaction and be able to use the additional time helping with the non-profit and spending time with my family.

chasesfish

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Re: Trust Fund Baby or Searching for FI?
« Reply #26 on: March 02, 2019, 06:16:27 AM »
Wow, so do I ever have some thoughts:

First off, congratulations to your dad for how hard he worked and what he setup.   I'm not in estate law, but I'm curious if the meaning of generational skipping trust means that you can withdraw the income it generates, but not the principal.  Do you know if the trust is flowing through someone's tax return or is it paying the pretty high trust tax rates?


Now for the root of your question(s):

I think this comes down to a combination of your personal pride and the family dynamics/family approval of the decision.   That requires conversation and transparency.   So I'll say this without any knowledge of your family dynamics:

I think the conversation goes like this:  "Dad.   I'm 35, worked in finance for 10+ years and I don't love it.  I've been able to save almost half a million dollars, learn some great skills, but am considering making a change.  I don't necessarily want to be the next CEO of XYZ Company.  I respect what you've done and want to honor that, but at the same time I also considering a different path.  I'm considering quitting and figuring out what's next.  I don't know if that means building a business myself or changing my career over to not for profit work.   Your generosity is part of what makes me able to do this without risking the financial security of the family, so I wanted to get your input"

You're already at the point in your life where you just need to earn enough to cover living expenses.  $500,000 saved at 35 will grow to quite a sum at 65 and self fund your retirement without a trust.  I'm in the camp of career change and not just kicking back on the beach yet.  If you're thinking about "founding" a not for profit, go work in one for a couple years first. 

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #27 on: March 02, 2019, 10:15:11 AM »
I'm curious if the meaning of generational skipping trust means that you can withdraw the income it generates, but not the principal.  Do you know if the trust is flowing through someone's tax return or is it paying the pretty high trust tax rates?

I can access the trust according to the HEMS standard (for my health, education, maintenance, and/or support) so while I can't pull huge chunks out at a time without being flagged by the IRS, maintenance and support are quite vague which allows me to pull out quite a bit at a time if I wanted/needed to.  Also, the trust pays the taxes so the tax rates are very high (hits 39.6% rate very quickly).

You couldn't have said this any better, chasesfish.  I plan on having this conversation soon with my dad to get his input.  Thank you!
« Last Edit: March 02, 2019, 10:27:12 AM by TFB »

chasesfish

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Re: Trust Fund Baby or Searching for FI?
« Reply #28 on: March 02, 2019, 01:39:24 PM »
I'm curious if the meaning of generational skipping trust means that you can withdraw the income it generates, but not the principal.  Do you know if the trust is flowing through someone's tax return or is it paying the pretty high trust tax rates?

I can access the trust according to the HEMS standard (for my health, education, maintenance, and/or support) so while I can't pull huge chunks out at a time without being flagged by the IRS, maintenance and support are quite vague which allows me to pull out quite a bit at a time if I wanted/needed to.  Also, the trust pays the taxes so the tax rates are very high (hits 39.6% rate very quickly).

You couldn't have said this any better, chasesfish.  I plan on having this conversation soon with my dad to get his input.  Thank you!

You're welcome.  I'm not in estate law, but I watch these conversations happen all the time since I loan money to entrepreneurs.  The "different paths" conversation is often really tough when mom/dad expect the kids to take over the family business and the kids would rather sell and carve their own path with or without the assistance of the proceeds from the business. 

The worst thing that can happen from this conversation is your mom/dad tell you they'd prefer to see you in a stable job and leave the trust alone.  You can still assure them you're okay financially, make sure you have enough income to cover living expenses, and honor the trust using 100% of the proceeds from the trust for the benefit of your children.   

I'm at 16 years in large bank finance, I get it.  I do not want to be nor will be the next CEO.  Enough is enough.

MrThatsDifferent

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Re: Trust Fund Baby or Searching for FI?
« Reply #29 on: March 02, 2019, 02:21:26 PM »
I'm curious if the meaning of generational skipping trust means that you can withdraw the income it generates, but not the principal.  Do you know if the trust is flowing through someone's tax return or is it paying the pretty high trust tax rates?

I can access the trust according to the HEMS standard (for my health, education, maintenance, and/or support) so while I can't pull huge chunks out at a time without being flagged by the IRS, maintenance and support are quite vague which allows me to pull out quite a bit at a time if I wanted/needed to.  Also, the trust pays the taxes so the tax rates are very high (hits 39.6% rate very quickly).

You couldn't have said this any better, chasesfish.  I plan on having this conversation soon with my dad to get his input.  Thank you!

So is the real purpose of this trust to benefit your children and not you? If so, Iíd use it as little as possible and focus on building my own money, but not worry about providing anything for the kids after 18 as it seems like theyíre now covered.

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #30 on: March 02, 2019, 04:51:53 PM »
So is the real purpose of this trust to benefit your children and not you? If so, Iíd use it as little as possible and focus on building my own money, but not worry about providing anything for the kids after 18 as it seems like theyíre now covered.

The trust was set up to benefit me but the remainder will be passed on to my children.  It is called a generation-skipping trust (GST) to take advantage of transfer tax rules.  My generation is "skipped" to avoid an inheritance being subject to estate taxes twiceóonce when it moves from my parents to me, then from me to my children.

Although I have no affiliation with the attorney's, the article below is a good resource I've used to understand more about this GST:
https://www.mckan.com/assets/uploads/pdf/Second_Gen_Manual_2014.pdf

MrThatsDifferent

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Re: Trust Fund Baby or Searching for FI?
« Reply #31 on: March 02, 2019, 05:12:55 PM »
So is the real purpose of this trust to benefit your children and not you? If so, Iíd use it as little as possible and focus on building my own money, but not worry about providing anything for the kids after 18 as it seems like theyíre now covered.

The trust was set up to benefit me but the remainder will be passed on to my children.  It is called a generation-skipping trust (GST) to take advantage of transfer tax rules.  My generation is "skipped" to avoid an inheritance being subject to estate taxes twiceóonce when it moves from my parents to me, then from me to my children.

Although I have no affiliation with the attorney's, the article below is a good resource I've used to understand more about this GST:
https://www.mckan.com/assets/uploads/pdf/Second_Gen_Manual_2014.pdf

Very interesting. Something to look into for the future.

FatFI2025

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Re: Trust Fund Baby or Searching for FI?
« Reply #32 on: March 03, 2019, 07:08:17 PM »
Leaving your current employment to do charity work or travel is a total trust fund kid (TFK) move. My TFK friends have done this for other passion projects including art, music, environmental conservation, semi-pro sports, and any number of failed vanity businesses.

Do you expect your kid to finish HS/college and work (profit-making) for a period of time? Until s/he's 25? 30? 35? If you leave at 35, it seems logical that s/he could make the same move at an earlier age.

My priority in your shoes would be to show my kid what it takes to not become a generational wealth statistic. With your resources you can create a profitable venture, triple your NW by 50 or 55, do a good amount of charity work, AND spend enough time with your kids.

Just one guy's opinion.

TFB

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Re: Trust Fund Baby or Searching for FI?
« Reply #33 on: March 04, 2019, 11:10:54 AM »
Leaving your current employment to do charity work or travel is a total trust fund kid (TFK) move. My TFK friends have done this for other passion projects including art, music, environmental conservation, semi-pro sports, and any number of failed vanity businesses.

Do you expect your kid to finish HS/college and work (profit-making) for a period of time? Until s/he's 25? 30? 35? If you leave at 35, it seems logical that s/he could make the same move at an earlier age.

My priority in your shoes would be to show my kid what it takes to not become a generational wealth statistic. With your resources you can create a profitable venture, triple your NW by 50 or 55, do a good amount of charity work, AND spend enough time with your kids.

Just one guy's opinion.

Thanks for the feedback!  I think a lot of this comes down to me trying to answer these questions:

1) What is the purpose of FI?
2) How do I honor my dad's legacy?

If the purpose of FI is to have the freedom and flexibility to do what fulfills you, then helping others and traveling might be a good use of my time.  However, if I relied solely on the trust for income to support my fulfillment and did not leave anything to the next generation, I would view this as being extremely selfish and not honoring my dad's legacy. 

As you mentioned, I think there is definitely a balance here where I can work hard to grow the trust assets, be able to do a bit of charity work and spend time with my kids.