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It's too bad so many people get suckered into setting up a trust. They usually just complicate things.
there are certain things I want to accomplish with the money im passing along. if a trust isn't the best way to do it, then ill be happy to learn of something better.
It's too bad so many people get suckered into setting up a trust. They usually just complicate things.
What are the disadvantages and other options? I thought the assets in a trust avoid probate unlike a will. Are you referring to the administrative costs?
There's so little information out there about the whole process that I don't see how consulting an attorney can be avoided.
It's too bad so many people get suckered into setting up a trust. They usually just complicate things.
Indeed. Trusts are most useful with massive sums. However, I've seen them with relatively small sums (sub $100,000), which seem primarily to be vehicles to exert the mandates of the dead. The problem is life's unforeseeable eventualities which lead to headaches for trustees and beneficiaries alike. Unless there's a significant tax benefit, trusts have a remarkable way of communicating (ironically) "I don't trust you to use these assets 'correctly'".
I realise that this post has a negative tone. I think trusts are a great tool, but one needs to get a balanced perspective on potential downsides.
I've seen a case where the trusts were very half-baked set up by inexperienced lawyers (trust law is highly specialised and not the forte of your average small-town lawyer) according to the non-specific wishes of the original asset owner. The result were the assets being locked in legal limbo for 7 months while the beneficiaries were running on "empty" financially speaking.
I was that beneficiary.
Summary:
-Explore your options THOROUGHLY
-Seek advice from expert(s) without a vested interest in your final decision
-If you proceed, find a specialist trust lawyer. I-banks and private bankers tend to know the local scene.
Indeed. Trusts are most useful with massive sums. However, I've seen them with relatively small sums (sub $100,000), which seem primarily to be vehicles to exert the mandates of the dead. The problem is life's unforeseeable eventualities which lead to headaches for trustees and beneficiaries alike. Unless there's a significant tax benefit, trusts have a remarkable way of communicating (ironically) "I don't trust you to use these assets 'correctly'".
I realise that this post has a negative tone. I think trusts are a great tool, but one needs to get a balanced perspective on potential downsides.
I've seen a case where the trusts were very half-baked set up by inexperienced lawyers (trust law is highly specialised and not the forte of your average small-town lawyer) according to the non-specific wishes of the original asset owner. The result were the assets being locked in legal limbo for 7 months while the beneficiaries were running on "empty" financially speaking.
I was that beneficiary.
Summary:
-Explore your options THOROUGHLY
-Seek advice from expert(s) without a vested interest in your final decision
-If you proceed, find a specialist trust lawyer. I-banks and private bankers tend to know the local scene.
Just to clarify,
the trust for which you were designated as a beneficiary, was drafted in such non specific terms that it made it difficult for the trustee to execute the terms of the trust?
the trust for which you were designated as a beneficiary, was drafted in such non specific terms that it made it difficult for the trustee to execute the terms of the trust?
To be honest, I couldn't say specifically. I had the trust documents, but I am in no way qualified to interpret what makes a "good" versus "bad" trust, with regards to how well-written the "Legalese" was.
Problem the First:
Insurance and banking personnel had difficulty with designating to whom (or what) the money should go. The details overwhelmed the lead trustee (my uncle) and the secondary trustee (maternal grandfather; uncle's dad) couldn't be bothered, having jetted to Florida to escape NY real estate taxes and washed his hands of the manner a la Pilate.
My theories for this element: the trust was poorly written or the personnel involved had no clue how to process a trust. The money involved was $300,000. For a trust, this is chump change. My university was, socially speaking, very rich, and we had students with "real" trusts with 100 times that sum.
Problem the Second:
After some months, my uncle feared that the trust, having finally received the check, would not actually provide a tax shelter. He came to this conclusion after some research and consultations. Eventually, he essentially just gave us each our share within a week of receiving the money.
Theory here: The trust was ultimately not worth the paper it was printed on.
Indeed. Trusts are most useful with massive sums. However, I've seen them with relatively small sums (sub $100,000), which seem primarily to be vehicles to exert the mandates of the dead. The problem is life's unforeseeable eventualities which lead to headaches for trustees and beneficiaries alike. Unless there's a significant tax benefit, trusts have a remarkable way of communicating (ironically) "I don't trust you to use these assets 'correctly'".
one of my goals is to pass down money to my children without strings attached. however, I do want to have some protection in there to make sure they are mature enough to manage it properly. I utilize the annual tax free gift into a custodial account, but that means my children access that money at 18 years old. that's too young. also, I want the money i pass down to be protected from any spouses that may become ex-spouses. if i make decisions that basically prevent them from having to make a decision on their own regarding protecting assets from spouses, i save them from that potential conflict with their spouse as the decision was already made for them. there are other goals i have, i think a conversation with a lawyer cant be avoided.
one of my goals is to pass down money to my children without strings attached. however, I do want to have some protection in there to make sure they are mature enough to manage it properly. I utilize the annual tax free gift into a custodial account, but that means my children access that money at 18 years old. that's too young. also, I want the money i pass down to be protected from any spouses that may become ex-spouses. if i make decisions that basically prevent them from having to make a decision on their own regarding protecting assets from spouses, i save them from that potential conflict with their spouse as the decision was already made for them. there are other goals i have, i think a conversation with a lawyer cant be avoided.
Good logic and motivations. To that I'd add:
I'd recommend teaching your kids about money. I think this is ultimately the best protection, as a 24 year old with no experience of managing *significant* sums of money is as bad a proposition as an 18 year old. Money management and investment skills are far more useful than a typical sum of cash (I'd settle for ignorance and $10 billion). I say that as a young person who benefited from such an education.
I'd recommend teaching your kids about money. I think this is ultimately the best protection, as a 24 year old with no experience of managing *significant* sums of money is as bad a proposition as an 18 year old. Money management and investment skills are far more useful than a typical sum of cash (I'd settle for ignorance and $10 billion). I say that as a young person who benefited from such an education.
oh yeah, i definitely plan on teaching my kids about money. i already do what i can with my 3 year old (we go through the sales circulars together). it appears i will have 2 daughters, so i feel that has to factor into my financial planning. im gonna have husbands to deal with and their wive's will likely have a lot more money than them.
from my google searching of local attorneys and reviews for them, I think im gonna contact this guy:http://www.eldercarelawyer.com/ I haven't liked the recommendations ive gotten so far for different reasons. one thing is some are in nyc and I don't want to use an nyc lawyer. I don't want to go there and I don't trust nyc professionals.
Last edited by CaptainNJ; 01-22-2014 at 09:57 AM..
one of my goals is to pass down money to my children without strings attached. however, I do want to have some protection in there to make sure they are mature enough to manage it properly. I utilize the annual tax free gift into a custodial account, but that means my children access that money at 18 years old. that's too young. also, I want the money i pass down to be protected from any spouses that may become ex-spouses. if i make decisions that basically prevent them from having to make a decision on their own regarding protecting assets from spouses, i save them from that potential conflict with their spouse as the decision was already made for them. there are other goals i have, i think a conversation with a lawyer cant be avoided.
One way or another, attorneys are going to be involved in this. Sounds like your primary motivation is to protect your kids. Okay, a trust can do that, to some extent. Still, there's a trade off. By protecting the kids, you're also complicating things, and you certainly don't have a crystal ball.
Have you looked into the administration costs?
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