Recently, I had an accident resulting in a major fracture, surgery and bed rest for a few months. I am grateful that I am alive and I can be back to ' normal' within a year. To be frank, it shook me to the core, thinking about my kids and their future. I live in USA with my family ( US citizens) and I have clearly defined beneficiaries of all my bank/ retirement and other accounts. May be this topic is already discussed here, but I was wondering what else can I do to make sure all my assets are protected and kids can utalise them. In one of our discussion, ' trust fund ' came up. Can you all share your experience on it if you have tried it? What are its positives and negatives? How do we have to set it up for our family? How is it different from ' living will'. What are the steps for it? Do you all have any other suggestions? Is there any better options? So far, I have not consulted any lawyers on it- learning stage now. I would greatly appreciate your suggestions and feedback on this topic.
I would do that to make sure you have everything covered under your state’s laws. But it is helpful to have some idea of what you want. At a minimum you should have a will to make sure your family members are taken care of in case anything untoward happens. Make sure you appoint guardians, have proper life insurance and beneficiaries designated for your retirement and other accounts etc. And then you can give some thought to how you will like your inheritances to be structured. We haven’t done it ourselves yet but a family member has theirs set up so their kids get the interest up-to age 30, and then they get larger disbursements as they get older. They have also put in clauses to keep this separate from marital property so they will not be left dry in case of divorce. The idea is for their kids to stand on their own feet and then have this as an extra layer of security. It will also depend on the amounts involved.
Thanks for the information. Looks like I need more information on how to seperate trust from marital property. But, all are linked
I would like to learn more from others experiences on will and trust fund, so tagging @Rihana, @Viswamitra, @nuss. Please tag if you think anyone else can help this discussion.
Sorry to read about your accident, DDream. Good to see you back and posting regularly. It is often such an incident that remind of the need for planning our kids future carefully, more so when living outside India. This took us quite some research and chasing the customer service departments of banks, brokerage etc. Defining spouse as the primary beneficiary is straight-forward. We got the run-around when we asked how to specify a secondary beneficiary for the scenario of both of us parents passing away together or close apart. Minor kids cannot or should not be named as beneficiaries of such accounts. We have an RLT (revocable living trust) and specifying that as a secondary beneficiary was also surprisingly difficult. I think we still have 2-3 accounts with only primary beneficiary (spouse). My friends and I looked into the trust fund option a few times as we didn't want our kids to get huge sums of money as a lump sum if we pass away when they kids are under say 25 yrs. The problem I ran into was who to appoint as trustee of the trust fund. No pun intended I had serious trust issues with the choices. We do not have siblings or close cousins in the U.S. I would trust our close friends with guiding our kids but not with money. The other option was professional trustee - this can be a bank, trust company, or an attorney. I just balked at the idea of trusting a professional trustee with my kids' entire inheritance which would be sizeable if we pass away at say less than 60 yrs. : ) In addition, the professional trustee costs are 1-2% of the trusts assets annually. So, we dropped that idea and went for the living will and RLT combination. One friend has opted for a bank managed trust fund which is because their daughter has a boy-friend who is unemployed and no plans to ever work. The girl will get fixed amounts at certain age milestones and certain life milestones. My sincere suggestion would be to find a good lawyer and get started on the process. The lawyer's assistants will explain all the options, choices, and answer all your concerns and questions including how to set up a trust fund. This is one project where doing your own research does not save on lawyer fees and instead you go down so many rabbit holes on the internet. Check if your or your husband's employer provides a legal services plan. If not, spend the $2-5K that it costs, it is well worth the peace of mind. So, find an estate planning attorney from Yelp, Nextdoor, friends, colleagues or your employer's legal plan. The attorney will give you a detailed questionnaire to fill out which is the starting point you are looking for. Filling that out will make you evaluate your needs, options and provide structure and tangible end-points to your research. Creating the legal documents is hard and takes time the first time round. You will most likely update them every 4-5 years as the kids grow older. There is no perfect set of documents that will take care of all eventualities. We can only do so much. For most families, a living will and RLT (or trust-fund) suffices to take care of U.S. assets. Two random pieces of advice from experience of my friends: - If spouse is not agreeing on things like whom to appoint as guardian, executor, trustee, give in to ensure that the documents get completed. Modifying the documents later to update to the desired guardian/trustee is a small cost update. - The spouse who is more inquisitive, "tell me why", details oriented, always has tons of questions type should be the one to interact with the attorney. It is no fun to be the intermediary between the attorney and the inquisitive spouse. TL;DR - Doing own research on the topic is unending. Get an attorney to guide you and the docs should be ready within 4-8 weeks.
@DDream, Yes. It is overwhelming when something like that happens. I am glad you are recovering well and will be alright. My trigger happened in Canada when our plan was about to land when another aircraft was on the runway. Our pilot took off quickly before the crash. This made me think about leaving the assets interstate and the family is depending on the financial advisors entirely for the next steps. Even now, both my son and wife are not fully aware of everything (either due to lack of interest or the fear of thinking about me not being there) I have and that bothers me a lot. When that incident happened my son was 10 years old and my wife was 37 years old. We wrote a will with three categories of advisors for my son if both parents are no longer there. One is a Trustee who would allow my son to enjoy the proceeds from the assets for his education and afterwards get the full inheritance when he can handle it himself. The second one is a foster parent to give him a place to live and provide parental guidance. The third one is someone who would provide him how to pursue his higher education after finding his interest. Luckily, all of these were redundant as both parents survived this long. Most importantly, that will I wrote 25 years ago looks different than the assets I own now. It looks like I need to rewrite a will now. Don't worry too much about the technicalities at this point. If your goal is for your children to inherit everything, discuss it with your spouse and write a joint will with him. Find someone who is trust worthy to administer it until your children grow up to become independent. Consult a lawyer explaining your objectives and he would provide the right advise. The recent opinions about irrevocable trust are both positive and negative, one set telling that it helps to hide the assets from lawsuits while others saying it is a hindrance. Legal advise would be the best option at this point.
@DDream - I’m sorry about your accident. I hope you are completely fine now. Regarding wills and trusts, it depends on the state actually. I’m about to update mine and recently was told that probate proceedings are ultra long and to add even the house to another trust. I haven’t yet made the appointment with the lawyer. A living will is your directive for when you are incapable of making decisions. It’s important to have one. Your lawyer will give you a questionnaire on this for sure. To have or not to have a trust fund was something that we did a lot of back and forth about. We did go the trust fund route for both kids. One an irrevocable air tight special needs trust and another a typical trust. We are going to fine tune it this time to ensure it cannot be intermingled with marital property. Trustee is my sibling of course, we both had no second thoughts about that. She lives in India, but both of us were sure we wanted it to be her. Legally, there are no issues with this but when Covid happened, I was wondering. I want to continue with her but now with the adult child wanting to be the carer for her sibling and asking us about it, I’m thinking hard. Even if you don’t have all your answers, set up time with a lawyer. With typical kids it’s very straight forward. Don’t overthink and wait for your research to complete. Basically what @Rihana has mentioned above is the best way to go about it. You can revise it later. It’s advised even to revise every 5 yrs. I hope your employer has a legal plan. It makes the process easier on the pocket. We used our legal plan and a special needs lawyer was a part of the plan. We were happy with the process. If your kids are very young, also consider term life insurance. I’ve been told that comes in handy. A lawyer may not be the best person to answer that question. Financial planners and asset planners, if you find a good one will be able to guide you a little there. Consider writing a will in India. Wills written in the US and registered with the consulates don’t really count for property in India. Lawyers in india know the law in India better. Use a lawyer who doesn’t know too many of your family members. A friend’s referral is whom I used.
