Single parents

[ontheway2]

Do you have a trust for your kids? If you were to die while your kids are minors, what plans do you have set up to prevent the other parent from having control of the kid(s)' inheritance as they wish?
I currently have my assets going to my parents with the understanding it is for my kids. However, their health issues have me wondering what I would do if they were not around.

[formerlydivorcedmom]

My ex and I have a good working relationship and I trust him to manage the kids' funds.

I've remarried, and I don't trust my stepdaughter's mother to manager money if my husband and I die.  I probably need to make an appointment with the lawyer to ask what we should do. 

Depending on how much you will be leaving, if you give the money to your parents to give to your kids, they may owe gift taxes.

[sparkytheop]

My son is an adult now, but when he was a minor:

I had a will stating my wishes.  Oregon has an automatic custody of child sequence that I highly disagree with, especially since my ex never looked back when he left (my son has not seen or heard from him the ex since he was around 9 years old).  I knew if the ex got custody, he'd just dump my son with his parents (which would be an extremely bad situation).  So, I put in my wishes that my sister would get custody, so she'd have something to take to court to prove that is what I wanted.

All my money and assets would go to my sister to control for my son.  That way there was no way my son would "come with money" that my ex could blow on alcohol, or the in-laws on whatever they wanted.  It was to cover expenses that come with raising a child, his college, future down payment on a house, etc.  I fully trusted my sister to handle the money appropriately.

My sister was also made the beneficiary on my life insurance, again with directions in the will on how it would be handled.

Now that my son is an adult, everything is back in his name.  However, before then, I just had the rule that I could not die before he turned 18, because I did not want any chance of my ex or his family getting custody.

[calimom]

I've been widowed for a dozen years and did create a trust for my kids. My very trusted BIL would be in charge of the funds, and knows my wishes for things like education. Another family member and her husband are named physical guardians. The minor children would continue to receive Social Security benefits from their late father's account as mine would be less (children can only receive benefits from one parent).
But like the above poster, I made a deal with myself that I can't die until they are fully formed adults, so that solves that. The idea of my minor children becoming orphaned is unimaginable.

I have five more years to go until the youngest is 18. At that time I'll rework my will and trust for complete equality between all three kids. One is a fully functioning adult, the middle one will be off to college next year. My own health is good, and I have no plans to take up skydiving, skiing black diamond trails or go extreme river rafting in the near future.

[Sibley]

Just based on the Inheritance thread, never trust anyone to do something the way you want. Especially when there's money involved. "understanding it's to be used for the kids?" Nope.

Go to a lawyer who does estate planning. Do it right.

[GizmoTX]

Just based on the Inheritance thread, never trust anyone to do something the way you want. Especially when there's money involved. "understanding it's to be used for the kids?" Nope.

Go to a lawyer who does estate planning. Do it right.

Agreed. You should have a will that names a guardian (actually, more than 1, in series, in case the first named cannot serve). Your will can create a trust for your minor child(ren) since minors cannot inherit -- you don't need a trust until you die. Name a trustee plus successors, in case the first named cannot serve. The financial trustee does not have to be the same as your guardian & in many cases shouldn't be. Do not have your child(ren) gain full control at 18 -- space it out for higher education, not one lump sum that they're not equipped to handle. Have successors to your executor in case s/he cannot serve.

[snacky]

I've been thinking about this. I need to get a will made, and here's what I'm thinking.

I can't control that the kids would go live with their dad. It's the law, unless he is proven unfit. It just sucks a lot.

Ex will get a lump sum that is equivalent to the amount of child support he would have paid if I were still around. So child support amount x months left until each kid is 18. That way he's getting the same child support that I have been getting.

Everything else would be liquidated and held until the kids are... what age? 18 seems really young to be getting a big chunk of money. One of my kids has autism. Controlling their finances from beyond the grave doesn't sound good either. What are other people doing about the age of inheritance?

[Dee18]

When my daughter was one I had a will written with my assets to go in a trust for her.  I named as trustee a good friend (my age), not a relative.  I also named him to be her guardian.  This could have been contested by my family as he was an unmarried male who lived out of state.  (He agreed he would move to where I lived, at least initially, so my daughter would not have to relocate.). I especially did not want my only sibling, a sister, to become guardian.  I wanted the guardian to be someone who shared my values and who would be able to tell my daughter a lot about me.  The lawyer had me write a letter about why I chose my friend as guardian.  She also told me to write other friends, who could later attest to the fact that I felt very strongly about this.  The lawyer also had me structure the money so my daughter would not get the last of it until she was 35.  The money I spent for great professional advice was so worth it!  I have reviewed the will several times and, because of the attorney’s advice, it still conveys my wishes today...even though my daughter has now finished college.  I have since educated my daughter about investing (she has a tiny Roth IRA) and not commingling her inheritance if she receives it after marriage. I also had a backup guardian named, who made me promise that I wouldn’t ride a motorcycle until my daughter was 18.  :)

[Laura33]

Yes, you need a trust.  Do not just leave your money to your parents.  Maybe they would never dream of using it on themselves.  But if you will it to them directly and they then experience serious health issues and have to go on Medicaid, they would be required to spend down all of your kid's inheritance before they could do so, no matter how much they wanted to save it for your kid. 

Get a trust, and write a will to leave your assets to that trust.  Name someone you trust to be the trustee -- that can be your parents, and it does not have to be the kid's other parent/guardian -- and spell out what the trustee can use the money for (there is standard language in most states for health and wellbeing and all that) and when the kid gets the residue of the estate.  For ex., ours authorizes the guardian to figure out a budget for regular withdrawals with the trustee to cover my kids' ongoing care; it authorizes the trustee to give larger chunks to the kids for specific life events (e.g., college tuition, as a graduation present, etc.); and then whatever is left goes to them at about 30.

@snacky:  I believe there are special needs trusts that are specifically designed for kids with health/developmental issues -- definitely talk to a lawyer to look into that.