The last time we got our will updated was 20 years ago.
Our kids were young, we were much less wealthy (net worth: $300k), and the world was entirely different.
At that point, if anything happened to us, we had our kids going to a family we were close with then — but have lost touch with now.
And, of course, the kids are much older than they were at that point.
Since then we’ve moved twice to new states.
Needless to say, we were due for a new plan.
That said, even though we knew we needed a new estate plan, it took us quite a while to get it done.
This is probably because it’s a task that’s important, but not urgent. “We have time” is the catch phrase of the almost 60% of Americans who don’t have a will.
According to a new Caring.com survey, only 42 percent of U.S. adults currently have estate planning documents such as a will or living trust. For those with children under the age of 18, the figure is even lower, with just 36 percent having an end-of-life plan in place.
You would think the wealthy would be better prepared, but we are not. My interviews show that most millionaires don’t have wills.
So we weren’t alone in this procrastination. Most people know they will die but just don’t think it’s going to happen anytime soon. Until it does.
I needed to get off the stick, but kept forwarding this task to the next month or even next year on my to-do list. I had “getting a new will” as a New Year’s resolution for several years without success. Eventually I just knew it was time to take action, and that’s what we did.
Key Estate Planning Documents
We needed much more than a will. The will is the central part of an estate plan and the piece most people are familiar with, but there are accompanying documents that are just as important and necessary.
According to The Balance, here are the essential estate planning documents:
- Last Will and Testament
- Advance Medical Directive
- Living Will
- Financial Power of Attorney
This list coincides with what we wanted as well.
I’ll get into what each of these are in a moment. For now I just want to emphasize that having a complete estate plan means much more than simply a will.
Finding a Good Attorney
Our first step was to find a trusted attorney who wouldn’t charge us an arm and a leg. This was much more difficult than you might imagine.
We started with some friends, asking them who they used to do their estate plans. But they were in the same boat we were and either replied “I have no idea” or “Tell me when you find one since I need an estate plan too.” Ha!
I kept at this (off and on) for a couple years until I found a friend who had another friend who could recommend a lawyer.
Turns out the lawyer was licensed in Colorado but lived in Arizona.
I emailed him, then we chatted through the options on the phone.
Everything else was done via email.
It was a very simple process once we found him — much easier than I thought (at least his part of it was easy, there was still hard work ahead for us.)
The lawyer explained that since we had less than $11 million each, our estate wouldn’t be taxed. So we didn’t really have to make plans around tax issues.
Our first decision was whether we wanted a trust or not. He described it as the choice between:
- Do you want to be inconvenienced during your lifetime (which is what a trust forces upon you)?
- Do you want your heirs to be inconvenienced after you die?
We chose the latter. They can work for the money. 🙂
Seriously, we did choose the latter. We may change it in later versions (see below) but for now we simply wanted to get a decent plan executed and adding a trust seemed like it would slow things down dramatically.
The second decision was how to divide up our estate. This took us the longest amount of time and forced the most discussion to reach an agreement.
The key issue: We want to give our kids a leg up, but we don’t want to leave them a crushing amount of money that ruins their lives.
My wife and I went back and forth with her advocating for a lower amount and me advocating for a bit higher.
One thing that’s kind of funny…when I told my daughter I wrote a post about how much economic outpatient care is too much, then explained what economic outpatient care is, she said, “I think the cut-off is about $1 million.” Ha!
Eventually we decided upon $500k to each child. Here’s how they get it (this is, of course, if both my wife and I pass — if only one of us does, the other gets everything):
- 1/3 distributed when my son reaches 30 (this would put my daughter at 28). They are 23 and 21 respectively now.
- Half of the remainder when my son reaches 35.
- The rest when my son reaches 40.
This way they receive their inheritance in stages so if they blow it upfront, there’s more coming later when they may have learned from their experience.
The money is managed by a close family friend. He has the ability to give them advances if he deems it’s needed. Otherwise he simply oversees the money in investments and distributes it when the milestones are reached. He’s called our “trustee”. My daughter is the executor.
We then left $100k each to my wife’s two sisters, my parents, and my dad, just in case we pass before they do. Obviously my parents will probably pass before we do, but the sisters may or may not.
What’s left (a bit shy of $3 million) is then sent to our donor-advised fund where our trustee will dole it out to various charitable organizations as he sees fit.
In addition to the wills, we completed a Financial Power of Attorney to make financial decisions for us if we were incapacitated, a Living Will stating we want no extraordinary measures taken to save us if we are in comas, etc., and a Health Care Power of Attorney to make medical decisions for us if we were incapacitated. Our son and daughter are our co-attorneys.
After we got all the details settled, our lawyer emailed us the changes. We printed out everything then went to a notary to do a huge signing party. 🙂
I then sent copies to our executor and trustee and also met with each to explain everything. I contacted Vanguard Charitable and set up our trustee as the “Successor Advisor” on our DAF.
Our trustee suggested that we make a video explaining our rationale, just to be 100% clear (he had heard this was useful). We will likely do this later on, but have not yet done so.
Here are our general thoughts on where we ended:
- $500k seems to be a balanced amount. It’s good enough to give a leg up (like help them buy a nice house plus a few other things) but not crushing in the way “I never have to work again” money could be.
- Dividing it seemed like a key element. Giving them each one huge lump sum could be a disaster, so we believe spreading it out is the way to go.
- Giving the trustee flexibility was also vital. It’s hard to predict the future, so there needs to be flexibility — both with the amount the kids get as well as the charitable contributions. We trust our trustee and want to give him the leeway to make the best possible decisions.
- We have talked about giving our kids some of their money while we are alive. It would work somewhat like a bank account. If they need something and we agree to help, they could draw from their inheritance. For instance, let’s say my daughter and her husband wanted to buy a house and needed $100k as part of the purchase. If my wife and I thought it was something worth helping with, we could give them the $100k now, then reduce her portion of the estate by $100k (to $400k) in our will.
- The $100k we’re leaving to the others who might survive us is simply “just in case”. It’s likely (based on ages) that most or all of these people will precede us in death, but you never know. So we wanted to leave some to those closest to us if the unexpected happens.
The whole process took five months, most of which was my wife and I deciding how to divide things up.
The final cost was a very reasonable $600. Last time we got a plan it was $2k or so. Maybe the availability of web-based options has lowered the costs of estate plans — I’m not sure.
I still have one more thing to do: sit my wife and daughter down and tell them where everything is.
I thought about writing it all out for them as described in What If You Died Tomorrow?, but I’m not sure it would be clear enough. That would be written in MY words and may lose something in translation.
My plan is to sit down with them and SHOW them where all the records, passwords, keys, etc. are. Then they can record what they feel is important in THEIR words, hopefully making it easier/better for them in case they ever need to use the notes.
Of course, an estate plan can be changed. We will likely adjust ours in the future now that we know the process isn’t as daunting as we thought it would be.
This round we simply wanted to get a “good” plan on paper. Now we can improve from here if we see fit to.
A few things we are considering (yes, we’ve already discussed them):
- Should we establish a trust to make probate easier? Not sure when we will do this, but my guess is that we will eventually create a trust.
- Should we make the kids’ inheritance income-based? For instance, what about setting up a fund for each kid that delivers $20k per year for 25 years at which point the principal is donated to charity? Would this be better, worse, or the same as the plan we have now? Still sorting this out.
- Should the amount be different (higher or lower)? This will likely depend on our kids’ actions. If they grow up and start spending like drunken sailors, we’ll likely lower the amount from $500k. If they are trustworthy and responsible, perhaps we’ll raise it. Time will tell.
The point is, just because our plan is “done” now doesn’t mean it’s done forever. We’ll likely make adjustments over time.
Anyway, I’m anxious to hear your thoughts on what we’ve set up, what we might consider for the future, what you’ve done in this area, etc.
Benefits of a Will
Several years ago I wrote an article about wills for a national magazine. Since it’s appropriate for this post, I thought I’d include it here as an add-on…
Much of our lives are spent working to provide for ourselves and our family. But what about after we’re gone? If you don’t have a will, others will decide how your estate is divided when you die. Follow these three simple steps to make a will that expresses your provision for your loved ones:
Step 1 – Find a good lawyer to do your will. Hand-written or fill-in-the-blank kits are often out-of-date and may not conform to state laws. Though a professionally prepared will may cost a few hundred dollars, it could save thousands of dollars for your estate. Ask friends and relatives for references as a starting place.
Step 2 – Complete the will. Be sure it includes the following:
- Who inherits your property. Make a list of all your assets and their approximate value. Then decide who gets your property, when they get it, and in what form. If you die without a will, the state decides what happens to your assets.
- Who will care for your minor children. Name a guardian (caretaker) for your children and a trustee (who distributes assets for children until they are mature and capable of making their own financial choices). Without your written instructions, the court will select a guardian who may not be the best choice.
- What happens if you’re incapacitated. A power of attorney gives someone legal authority to make health care and financial decisions for you if you cannot make these decisions yourself. A living will gives your doctor your desires regarding life sustaining procedures, artificial nourishment and organ donation. You’ll need both.
- How you minimize estate taxes. Many people have estates much larger than they realize when life insurance, retirement benefits, home, farm or other real estate, savings and securities are taken into account. Structure your will to avoid the unusually high estate taxes.
- Who administers your will. Choose an executor or a trustee. This person carries out the terms of your will.
- What gets donated to charity. Federal and state tax laws allow your estate to receive a charitable deduction for the full fair market value of a gift. Your will can remember the work of your favorite charity by donating a specific dollar amount or a percentage of your estate.
Step 3 – Update your will as needed. Review your will every three years to be sure it fits your present situation and conforms to current state laws.
Make it a priority to have your will drafted soon. It will not only allow you to express your desires regarding your health and resources, but will also give the maximum provision to those you love and wish to benefit.
I have a will in place shortly after my daughter was born.
The estate plan/trust formation is what I have been procrastinating on with the ‘I will get to it soon” mantra.
I think dividing the inheritance for my child is the best option as well. Giving a large lump sum especially when she is younger may lead to her blowing it all.
If I have a good passive income machine set up (which I am starting to think I do), ideally I would have it so my daughter touches the income produced but not the capital.
It is going to be a bit harder for me because I plan on eventually getting married (2nd one) with a blended family created so it can be a bit trickier (my fiancee has 2 adult kids and I have a 14 yo).
Stop Ironing Shirts says
This is a great writeup and something post people put off. When we finally got around to taking care of our estate documents, the lawyer looked at us directly and said “this is a serious amount of money”. I guess we weren’t the first millionaires in our 30s to walk into her office.
One question related to the DAF and Successive Adviser: Did you looked to see if your area to has a local Community Foundation that offers field of interest funds? Our DAF wasn’t large enough at the time to do this, but when we update our next plan we are going to have our Donor Advised Fund granted fully to a local community foundation and then have that foundation handle the grants in perpetuity towards the charitable missions we care about.
I’m not sure what the difference between having an organization do this or a trusted friend — other than I trust the friend to do what I would have done (which seems better.)
I have had trusted a friend and relative as my trustee at different times. Both have died. I will be using a financial institution as a trustee in the future.
This is a very relevant topic for the MM community, so glad you raised it. Wife and I have had a comprehensive estate plan in place for past 25 years, and we helped her now deceased mom also develop one. One of the things we found from helping parents and elderly friends with this sort of thing is that it is clearly something people don’t want to think about. As a result, if people have anything at all, it is usually entirely inadequate and often drafted by a generalist, not an estate specialist.
In both my mom and my mother-in-law’s cases, the original wills even mis-spelled some of the kids names… that’s how badly drafted they were. We were stunned, but on reflection, we think our parents were of a generation that overly trusted professionals, like doctors and lawyers, to do the right thing. They went to the local generalist, paid a modest fee, and they probably did not even read what was drafted… just signed it.
Key takeaway is that if you have significant assets or expect to someday, please find an attorney who is an estate specialist. A comprehensive plan may cost a couple thousand dollars but will be well worth it. We update ours every 2-3 years, and next big revision will probably involve establishing a trust – both as a tax deferral mechanism and as an asset protection device – something I’m researching now.
Other take-away is that when our parents became ill and unable to handle their affairs, the Power of Attorney was invaluable and allowed us to cut thru a lot of red tape with the courts. Of course, choose the individual you entrust with this carefully!
P.S. ESI, you make reference to a trustee, and to doling $ out to beneficiaries in portions over time, so sounds like you created a trust.
But earlier in the article you said: “Seriously, we did choose the latter… we simply wanted to get a decent plan executed and adding a trust seemed like it would slow things down dramatically.” So, I’m confused… am I confusing plan 1.0 with 2.0?
We do not have a trust, just a trusted person who’s handling the charitable giving and watching the kids’ amounts. Perhaps calling him a trustee was a poor choice of a title.
Thanks for the clarification. So, sounds like one of two possibilities here: (1) Your trusted friend will receive the funds personally as a beneficiary in your will, and will disperse funds according to your instructions (and their judgement); or (2) Your will has a provision to create a testamentary trust and names your friend as the trustee.
There are different challenges with both possible arrangements. In #1, your friend would have complete discretion despite your intentions. Much could change over the course of time, both in his life or in any of your children’s. Second, the funds would be at risk from any litigation, divorce, creditor claims, that might occur in your fiend’s situation. Third, what if your friend passes away prematurely (an accident for example), then the disposition of the funds would be in question.
In #2, at least the probate court would have jurisdiction over the testamentary trust, which would be created at time of death, but the trustee would have to check in with the court annually, which could be a bit of a burden for them. There are, of course, court fees and your friend may want the assistance of legal counsel, so more fees eating into the trust. If your goal is to have these assets avoid probate, neither of these solutions will accomplish that.
Either way, I suspect you’re headed towards a more formal revocable trust arrangement in version 2.0 of your estate plan.
Thanks for highlighting the topic.
He’s named as the beneficiary on our DAF at Vanguard. The funds will go into it and he’ll make gifts from the fund.
Sorry if I’m slow… Can he make gift to your kids from the DAF? I had thought those were only for charitable giving, but that’s only an impression.
The charitable part goes to the DAF. The funds for the kids are held in an investment account which he controls.
I handled mine almost exactly as you did !
Nice write up.
K D says
Great post. This has been on my to-do list for a few years. We have an old will that is very basic. Since it was written our assets have grown considerably and we went from being 8 months pregnant to having a 23 yo daughter. It is time to work on this. I love the decisions you made regarding giving. We will probably do something similar.
Thanks for this great post.
Just wanted to add my two cents. I think you are making a mistake not leaving more to your kids. There are too many unknowns going forward. What if they are disabled in a car accident? What if they have a child with special needs? If you do stick with 500K, I hope you include a COLA.
Why do you think they deserve anything? They have been provided for and given many advantages to date. And they are now both legal adults.
So why should even one penny go to them? Using your reasoning, wouldn’t I be better served to find people who have been disabled and/or have a child with special needs and give the money to them?
It’s an interesting concept to consider…
Just wanted to point out, that in my opinion, 500K is not a lot of money. Using the 4% rule that is only 20K a year. Your kids are the ones, that hopefully, will be there for you in your old age. If they do even half of what my wife does for her parents (mother has Alzheimers) they will deserve it.
In my opinion, I think you are being pretty cheap with your kids. If you trust your children, and want to support them, why not leave them more of your estate? IMO, in 30 years, $500K will likely have significantly less purchasing power than it will today. Of course you can revisit the amount, but why is it ok for you to retire in your 50’s but not help them retire in their 50’s? What does it really matter where they get their money? They both seem like they have learned the value of hard work, and have gotten that ethic to you and your wife. It’s not like they can do nothing for the next 30-45 years (given your current age, your life expectancy is greater than the median survival in the US) waiting for their inheritance.
In your current estate plan, what happens to assets like ESI or your rental RE? Why not divide those assets among your kids? It would seem like your daughter would be appropriate for ESI and your son would be appropriate for the RE. This way, you are providing them with revenue generating assets that would provide for them for many years.
Personally, my wife and I are leaving out estate to our children.
First of all, if we live 30 more years, the plan will likely change, as I have noted.
Second, you are making assumptions about my life and kids based on your understanding which likely comes from perceptions created from blog posts. Do you think that matches reality or perhaps we might have some extra insights based on real-life that are closer to truth?
Third, great wealth can crush people. You know this and I know it. It would have crushed me when I was younger. I do not want that for my kids. One example, our son has a friend who has a trust fund (he doesn’t even have access to the money yet — just access planned in the future) and you should see what it’s already doing to him.
Fourth, it’s not like $500k is nothing. $500k, especially if inherited in the 20’s or 30’s is more than enough to create a comfortable life, but still require some effort from them. Plus it’s more than the vast majority of Americans have.
Fifth, what gives our kids any more right to the money than anyone else? In other words, why should they get anything? They have their lives started (college and working), which we have provided along with support to get them started, FAR, FAR more than the support I received when I was their age. Why should they even get $1 more? Couched in this light, $500k looks over the top.
Finally, what about other people? What about the hundreds/thousands that we can help, while also giving our kids half a million dollars? Do you have no concern for them?
I realize that your answers to these will likely be different than mine. And that’s fine. I wouldn’t do what you’d do and you won’t want to do what I do. That’s what makes personal finance personal and it’s ok.
BTW, for kicks I looked up $500k net worth and apparently that would put them between the 75th and 80th percentile in US net worth. That’s assuming they have accumulated $0 in net worth on their own.
I’m sure that’s the case, but where we live on the East Coast, it is comfortably middle class at best, not extravagant.
I’m not shooting to provide a high cost of living lifestyle nor am I going for extravagance.
“I realize that your answers to these will likely be different than mine. And that’s fine. I wouldn’t do what you’d do and you won’t want to do what I do. That’s what makes personal finance personal and it’s ok.”
Indeed. My response was my opinion. “I think…”.
Yes, my response is based in part on my bias as well as the picture you’ve painted of your kids. Maybe you’ve painted a picture that isn’t accurate, but I don’t think you are playing a years long game of writing about your children in a way that is much different than how you really feel. And to me, to base your decision on what to leave your kids in part based on the behavior of one of his friends seems inconsistent with how you usually report that you do things. You don’t really seem to be one to give much of a shit about how other people do things.
What support I received from my parents is extremely relevant to me in the context of how I’m giving to my kids, I do some things similarly, and other things differently, as (my wife) and I judge to be appropriate for our kids. Indeed, we often differ in how we treat each kid based on the individual factors related to each.
When I look at the totality of people I know, as well what the likely scenario is for our inheritance, my sister and I will receive the majority of my parent’s estate. My parents provided me with lots of advantages, and my wife and I have done very well on our own, and their help has been a part of that (it allowed us to take some risks knowing that the downside was covered, and those risks paid off). Interestingly, my wife’s parents were not in a position to provide substantial help, and even they will leave their estate to my wife and her siblings (which is mostly in the form of farmland in Iowa that will have reasonable value.
As to my concern for others, I’m not exactly sure what part of my response suggested I have no concern for others. Just because I want to leave my estate to my children doesn’t mean my wife and I don’t support causes that help many people. In addition, both of us have chosen professions that are both generally lucrative AND directly impact thousands (wife) and potentially hundreds of thousands (me) of lives. And these impacts are direct health related impacts that lead to longer and generally healthier lives. And by choosing these careers, we’ve both left significant amounts of potential earnings on the table. there are more ways to give than just by leaving money. We work it every day.
I did not give the example of the friend saying we based our plans on it. It’s an example, in real life, of what we already believe.
I’m done with this thread, so please do not assume my lack of commenting on this discussion as assent in any way. It’s simply futile because:
1. You continue to make assumptions about me, my kids, the circumstances, etc. that you can not possibly understand from reading blog posts. You may think you do, but I can assure you, you do not.
2. You are not me and I am not you.
Having a full estate plan in place was invaluable as my mother aged to nearly 101.
People don’t realize how much these documents help while you are still alive. As my mother’s capabilities declined, the estate plan meant that I had no hassle from her accountant, banks, investment companies, Medicare, insurance companies, medical staff, hospice, as well as the day-to-day bills — and that was all before she died.
My mother loved the anonymity that her trust provided. She did not want the general public to know her affairs before or after she died. And she preferred to pay an experienced estate attorney rather than incur the cost of the probate process.
Each of her children had a full copy of her trust for years so there were no surprises.
In addition, I had documented exactly what my mother wanted in her funeral so when the time came, we just implemented the plan. My mother also had another daughter maintain a draft obit for about 20 years and a potential list of pallbearers.
So far, the hardest part has been distributing her personal and household belongings.
Now that’s a good estate plan in action!
My understanding is a trust helps your heirs avoid probate which can be costly and involves the courts. You might want to double check, but I think a will still goes through probate.
That is correct. Did you read the part as to why we decided not to go with one?
I did, but you didn’t mention probate and I wanted to mention it in case you weren’t aware. Not only will your friend/kids work to manage your estate, they will also pay the court for the privilege! I think it’s great that you have put together some type of plan which is definitely better than no plan!!! We learned that Fidelity has a fiduciary component and we decided to have them be the executor of our trust (once we update it) to avoid having our 2 friends currently listed as co-trustees have to hassle with it. Settling an estate is a lot of work. And we didn’t care that the fee Fidelity will get will come out of our estate, but we don’t have children to leave anything to.
How much does probate actually cost? My friend’s mother’s entire estate, around 1 million some twenty years ago, went through probate. He was the executor and I didn’t hear him complaining much about costs. But he certainly complained about time and filing and pain in the behind forms to be filled out or gathered or signed and submitted. Therefore I’m guessing the biggest issue of probate isn’t cost but time. Items outside of probate go directly to the party you want without anyone having to wait, e.g. joint bank accounts with right of survivor signed or set up, IRA’s with beneficiary forms filled out, life insurance with beneficiaries spelled out. You can put a lot into those areas that will never go to probate. But I haven’t heard probate as being exorbitantly expensive, just long and drawn out such that it can take a year or more to fully settle an estate. That said, there can be real costs with respect to time if the executor isn’t on top of things, like paying on a mortgage or getting property taxes in, or not paying bills, etc.
The problem with Probate is time. You may inherit assets that need to be acted upon now, or taxed, or how to pay this tax, yet you do not yet have control over anything until the process is complete. That is the complaint I have heard from friends who have dealt with it. The cost is not ideal but that all depends on how much is being handled.
A longtime friend recently experienced an unnecessary probate in Los Angeles County. HIs father passed, leaving a house and savings, totaling $900,000.
The probate cost was $60,000, and the remaining funds of $840,000 were released to him after just over a year.
I agree with some other comments above – I will definitely leave more to my kids and family. Maybe instead of looking at the amount ($500K), consider that the kids get at least half. Depending on how long you live and whether your estate continues to grow, that $500K might be a very small percentage in 10 or 20 years.
How about $500K or 1 million to charity and the kids/family get the rest?
What does your current estate plan leave them?
Great article. I am single, 67-years-old, and no kids. The vast majority of my estate is going to a charity I support. I have a Will, but also use PODs on my CD’s.
Any special advice for someone who is single?
Yes. Contact a lawyer.
I have a corporate executor through my bank. A bit pricey, but I need one as my brother’s live out-of-state.
I’ve started with my philanthropy now, making sure I don’t over do it before I die.
This is a very important topic to address. Thanks! We have had an estate plan with a Trust for about 25 years (in our mid fifties now). It is our understanding that using a trust to avoid probate maintains privacy, saves much time, and may not cost any more than probate in the long run. We set up a similar arrangement for our kids, giving them more as they age. The toughest part was choosing a guardian for our daughter who is now staring high school. Is her 27 yo brother capable and willing to take her in, or would close relatives be a better fit? We chose to give our some the option. One thing I haven’t done is put all financial documents into a cohesive, understandable plan for my wife and other family.
A couple of things we have done to help our kids without giving them available cash is to set up a retirement plan for them and add money equal to what they have earned. Also, when your kids have their own kids you can set up trusts or college funds for them, which eases the burden for your kids later in life, while taking advantage of the time value of money.
We’ve done some similar things, as long-time readers know, to help them out so far and will likely do so in the future.
[email protected] says
I laugh and I am sorry to hear that people think that you are being cheap to your adult children. No wonder the younger generation can’t deal with the realities of life. The parents are doing everything for them, even when the parents are dead. It is called life and it is a journey. We did it, our parents did it, and so on. Let them do it. I can’t be there for the kids every step of the way and cannot predict the future on what ifs. I can help them when needed, but will not give them a leg up by giving them my whole estate. If everything is handed to them, what will they learn? Wait till people die and get rich?
I am reminded of the English shows that show 30-40 year old kids living with their parents in mansions, not working and complaining about their allowances.
We did a trust for our kids like you did where it is doled out over the age milestones. Most goes to friends, families and charities. We have had a trust for 14 years and changed it three times. We just updated it this week. It is a dynamic document that is easier to maintain after it is created.
I know, I know… 😉
This is such an important topic for all of us – thanks for sharing. Some thoughts for consideration based on my experience – not only our own estate planning but also being a POA / trusted advisor for several family members: Trusts can be good BUT some mistakes I have seen is when a single parent, for example, only has themselves as the Grantor and Trustee. This is a big mistake because if a trusted child is also not a joint trustee, the child cannot effectively help the parent manage their financial affairs while they are alive. A POA doesn’t work in the case of a trust as it cannot be applied to managing a trust – a person must be a trustee or joint trustee. Many of us don’t plan effectively for how we may assist a parent (or family member) when they are still alive but require assistance with their financial affairs. We need to have the proper POAs OR be a joint trustee on trust accounts.
Transfer-on-Death / Payable-on-Death beneficiary designation is another way to handle some accounts if you want to pass the assets directly to your heirs. Having all assets pass as TOD / POD, avoids probate – the assets pass directly to the heirs outside of a person’s estate. Additionally, the TOD / POD designation actually takes precedence over a Will. If your beneficiary designations on your investment account says “A” and your Will says “B”, the TOD/POD beneficiary designation on your investment account wins. Therefore, we all need to be sure the beneficiary designations are aligned with what we have designated in our Wills.
Regarding ESI’s comments about sitting down with his wife / daughter to provide them with the info that they need in the event that something happens to him. I am a huge advocate of this approach but I have everything documented as well – I know that if I sat my wife / son down to discuss with them now, they will not retain nearly the information that they will need in the event that something happens to me. I prefer to have super encrypted, secure files that they can read if something happens to me – I have also recorded a video of myself to provide them with some verbal guidance around tips / tricks that are better communicated verbally than in a written document. I want to ensure that they know exactly what to do in the event that I am not around.
Really good. I really like this.
I have PODs on all my CDs as most of my estate is going to Charity.
Jennifer Solak says
ESI, thank you for posting on such an important topic! I read your site frequently and also practice estate planning law in Texas and Louisiana, so I am happy to see you underscoring the importance of a comprehensive estate plan for preserving wealth and facilitating its management during incapacity. Thank you again!
“I think the cut-off is about $1 million.” ESI, your daughter sounds awesome! You have taught her how to negotiate, and this was her ‘anchor’. Don’t think for a minute that it didn’t factor into your generous decision for $500,000.:-) We have retained a professional “Trustee” who will charge $100/hr to distribute our remaining estate. We don’t want to introduce drama by asking a family-or-friend to do it.
One thing I did which will be useful for the Trustee is to prepare a ‘one-sheeter’ with everything they will need to know. It is dated (updated every few years) and includes a list of assets with contact information, and contact information for beneficiaries. The useful part will be what we do NOT have, i.e. safe deposit box, storage lockers, identifying collectibles or items or particular value, and the status of our debt, property taxes, and income taxes. Tomorrow is promised to no one! Great post and message.
Yep, I created a bullet point sheet for my trustee and we talked it through over lunch. 🙂
Perfect, no matter how clear the written document(s) are, there is nothing like just telling people what it is you want. Your trustee must be an excellent friend to you, and he must feel the same way towards you.
P.S. – am stunned by some of the comments, here. Always expect the passive-aggressive tone, or the judgy teeth-sucking scolds, but you have really triggered them here!:-)
Adam Carolla tells a fun story where he and Jimmy Kimmel teamed up for charity for the San Gennaro festival. He told his Italian grandmother proudly, that they raised $800K in three days. Her reply? “You know Jon Bon Jovi just gave $1 million for Hurricane Sandy victims.” You know this already, but all these anonymous nasty commenters are the equivalent of Carolla’s grandma.;-)
JayCeezy – Funny comment. Two ways to financial independence….Read and follow the advice of this site, or simply listen to the Ace Man and do not just your best, but his best. He is an underappreciated genius I wish more would listen to.
“I agree, wholeheartedly.”
Was tempted to reply, “we will just have to agree to disagree,” but that would squash both your point, and Rockola’s. btw, a tiny piece of info never revealed explicitly anywhere before, which you will enjoy. The show where Adam’s unicycle reveal was almost blown was “The Tonight Show” and the segment producer was Dave Berg (now retired), and the young opinionated P.A. responsible for that Ace classic quote is now out of the business. Mahalo!
I love how people who (likely, based on the odds) are not wealthy, don’t have a will, and certainly haven’t earned my money for me have such strong opinions on how I should use it. LOL!
I’m in Arizona…would you be willing to share the name of the lawyer you used? Like a majority of people, I need to tackle this and having a trusted, cost-friendly lawyer is half the work, if you’re willing to share:) Thanks!
If you give your kids much money before you die, is it subject to the 50% gift tax? As I understand it, you and your spouse can give $15k each per year taxfree.
Google it. There are ways to pass on a ton of money with no tax implications.
2 ways: (1) 15K annual — can be used to get to 60K per kid annually using the tricks below. (2) Any amount you want up to 11 million tax free 1 time.
(1) Method one:
15K per year from person to person tax free. i.e. You can give your daugther 15K. You can give your son-in-law 15K. Your wife can give your daughter 15K. Your wife can give your son-in-law 15K. 60K per year every year tax free. That’s one path.
(2) Method two:
The other is to give them some huge number, like 500K in a big lump sum. If you do this you have to reduce your estate tax free exemption by the same amount and pull that forward into a gift exemption. For example, you currently have an 11 million dollar estate tax free exemption upon death. You can gift 500K now and reduce your estate exemption by 500K to 10.5 million. That reduction is permanent.
Notice that 11 million is a very healthy estate tax free exemption. Reducing it by a few hundred K seems insignificant. However that estate tax number is far from guaranteed. It was 600K in the 1997 and 200K in the early 90s. It has consistently been raised over the years but there is constant pressure to lower it and that pressure has increased considerably in recent years. I would personally be reluctant to convert much of this exemption into a gift tax exemption because I could see the exemption getting lowered very considerably, perhaps back down to a million or 6 figures. If you had used 1 million of your estate tax exemption out of the 11 million and they lower the exemption back down to 1 million you would no longer have any estate tax exemption. It would have been entirely used up by the gift tax exemptions. Don’t underestimate the pressure to go get the money of those who have it. A candidate on the current campaign trial (who has since dropped out) made this comment earlier this year, “There is plenty of money out there to pay for all these programs, it’s just in the wrong hands.” Those wrong hands are your hands. They will eventually come for it. Its worth noting that this exemption was doubled from in the Tax Cut and Jobs Act of 2017. This is set to expire in 2025 after which time the exemption will automatically be reduced back down to about 6 million if it is not lowered via legislation prior to that time.
Given that you and your spouse could gift 60K to a child and spouse each year, I can’t think of many cases where I would ever want to use the estate/gift exemption prior to death. I can only think of 1 case I would want to use it and that is the following:
The one case it could make great sense to convert the estate tax exemption to a gift exemption is if you were later in years and had a big estate, lets say 30 million and the hand writing was on the wall that they were going to lower the estate tax exemption from 11 million down to 1 million and probably raise the rate. Now upon death your estate would get taxed heavily (estate tax rates are very high. Currently 40% but have been as high as 55% not too long ago). In this case it may be wise to gift 11 million from yourself and 11 million from your spouse to your kids, leaving you with only 8 million to hit the estate tax instead of 28 million. That’s the only time I would ever use the gift tax exemption. (notice the little tricks above for donating 15K from each spouse to each child and child spouse do not work for the estate tax exemption. That exemption is for each person who owns the estate 1 time in total and cannot be repeated for each person receiving the inheritance or in this case the gift).
As a side note: none of this is a commentary on the wisdom of doing any of these things with respect to some of the debates in the comments about how much to leave children and when. That’s a personal decision that I have no commentary on. This is only to state what is possible, not what may or may not be advisable.
Great article ESI and I had “Create a Will” on my To-Do list for about 5 years before I created one 6-7 years ago and now have had “Research Living Trust” on my To-Do List for the last 2 years and something I need to tackle on 2020 but outside of the “who to use/how to get started” you bring up some great points my wife and I have not fully thought through (or even discussed) especially as my Net Worth has grown especially regarding my kids (who are 13 and 12 right now) and currently my will have a 50/50 split when they turn 18 (which I definitely want to change for many of the reasons you mention in article and comments)
One idea I might do is to make my kids (once they turn 18) the trustee to the $ that are contributed to my existing Charitable Trust (Similar to a DAF) if something were to happen to me and curious if that is something you considered.
Curious Jennifer Solak what is the ballpark $ for Texas to build a “normal” not extremely complex living trust?
Feisty Fire says
Although difficult to understand, It’s commendable the amount you are giving to charity. Gracious folks like you probably make America the greatest country to live in with the best people. Beyond the gloomy news, it’s comforting to think there are people like you who prioritize helping the less fortunate.
Being from a different culture, god forbid, if my parents do something similar, I don’t think I would be able to sleep at night for the rest of my life! 🙂 In fact this very post is going to give me nightmares :), Luckily, I’m successful in my own domain and my parents trust me to have a frank conversation with me on this topic! My dream is to open my own small business and a windfall inheritance would go along way in helping me make my dream come true. I do realize this makes me sound selfish but just giving an honest take!
It’s interesting to me that you say it’s difficult to understand. I wonder why this is the case.
As I noted above, we are open to helping them now.
So if our son or daughter came to us and wanted to start a business, we’d ask a ton of questions (of course) and if it’s something we felt we wanted to support, we’d give them the money from their inheritance early.
Finally, I would consider $500k a windfall — you do not?
Feisty Fire says
For me , It’s definitely a windfall if it comes from extended family. But a parent giving me 12.5 % of their net worth and donating the rest of it or having to deal with a extended family member or family friend to get access would be difficult to digest and insulting.
Anyone In their 20’s and 30’s living today in America needs bare minimum 5 million by the time they hang up their boots. With Artificial Intelligence, Robotics, and Crowdsourcing on the rise middle class will be further eroded and very few people will achieve the American dream or succeed in the future, God forbid if I’m part of the majority of people
who do not succeed and then remember that my parents gave off majority of their wealth to charity while I struggle. That would be difficult to digest and come to
Again, I do realize my way of thinking is selfish and pessimistic and if everyone thought like this, world would be a much worser place.
Hence I have respect for your Different way of thinking and generosity.
I’ve heard from reliable sources (e.g. my estate planner in WA and “free” financial advisor) that If the estate owner lives in CA, you really need to get your affairs in order before you die and probably want to set up a revocable living trust and put your assets there. I was told probate is super time consuming and expensive in CA. So glad my mom got this done. Until we did our estate plan, we didn’t know (nor did my parents) that estate plans may not be valid if you move to a different state. We’re in WA state and the advise in this article seems to be fine for WA but if you have a sizable estate, do it right with a lawyer that is licensed to practice and has expertise in estate planning in that state.
“…wealth can crush people” So true.
I am also one of those that may be perceived by some as being too cheap with my kids. We recently set up a living trust and a will. I am not yet 50, kids are in early teens, current NW is around $4.1M. As the kids are still teens so still lots of college to pay for and room for them to make great choices or bad choices. Their successful launch into adulthood is not yet certain (fingers crossed of course!) Our main reason for the will and trust now was addressing what happens with the kids and with the money in the very unlikely event both me and the wife bite the dust before the kids are grown. There was not a clear choice on where the kids might go inside the family, and no one in the family was really qualified or experienced on how to manage the money which drove us to create the living trust and will. Luckily for us, on the recommendation of another family friend they referred us to an attorney who does just this and we found she was excellent. Feel really good about what she put together for us. As NW grows (we hope) and kids get older, we may revisit the trust and will and adjust as needed. Our trust included a personal note to survivors and trustees. Below is what is summarized in our trust which I thought might be of interested to readers here, names of course redacted:
Notes to survivors & Trustees MI-94
We selected the adults of Family 1 or Family 2 as trustees of the estate and as guardians of the kids as we felt they shared our values on parenting, would be up to the task, and would and are also qualified to handle the funds left behind in a financially sound fashion. We trust them completely and expect that they will use these funds to raise the kids and later educate them into a successful and productive adulthood. The funds left behind are significant, we do not want the kids spoiled with unearned money. We expect the trustee will liquidate all our assets, invest the funds wisely, and then distribute what remains after trustees expenses raising and educating the boys, but not until they-have-reached the age of 30 and proven ready to handle-the funds themselves as determined by the trustee. If in the event we all pass, we have asked that the trustee split our estate evenly between nieces and nephews in equal shares. No funds to anybody until they reach the age of 30. This will be a difficult task for the trustee, we expect everyone in the MI94 extended family to cooperate with them. We also expect the trustee to compensate themselves from the estate for any expenses incurred managing the trust and raising Kid 1 and Kid 2. We are gone, use the money wisely, don’t waste it on anything dumb, it was earned the hard way. If we both pass and both Kid 1 and Kid 2 are over age 30 we expect that they will liquidate all assets of the estate and split it evenly between them. We expect they will consult with Family 1 or the Family 2 for advice on how to invest the money wisely. Do not waste it!
Have you considered letting your children choose which charities receive the remainder of the money? That might be a nice way to let them be involved in your legacy. Maybe they would get involved with the organization more as well if they know their parents money is going towards it and they chose it.
Not really. We’d rather the money was distributed according to our wishes, not theirs, and I’m confident our trustee knows the sorts of organizations we like (because I’ve talked with him about it in great detail).
They can always give themselves or get involved in organizations of their own accord, of course. Nothing is stopping them from doing that now.
I have found that there’s a big difference between giving your own money away and giving away someone else’s money. It’s way more personal and meaningful when it’s yours in my experience…
“I have found that there’s a big difference between giving your own money away and giving away someone else’s money.” … See U.S. Govt for reference.
Fidelity Investments has a Charitable donor advised grants program. A individual can open an account and make non-refundable donations, A annual statement is given which lists donations for tax purposes. The donations are then invested in mutual funds that the donor chooses. The donations can grow within the mutual funds. The donor then can request a grant be given to the charity that they choose. I like this program because you can 1) donate appreciated assets like stock 2) it allows my donations to possibly increase in value.in mutual funds. At my death, I can designate someone to continue giving charitable grants with the balance of the funds.
Vanguard has the same thing, which is what we’re using.
Give ESI a break. This will is unlikely to be used as written. $500k is a ton of money for kids in their 20s.
Agreed. Some overly harsh comments above. Not sure why.
100% agreement. Its not for any of us to judge what $$$ he wants to give his kids and he did not ask for our opinion – we don’t truly know his priorities and circumstances.
Great topic. I am a widow and therefore have a detailed will and trust. Right now I am in good health and able to really think about these plans. I found out estate laws are different in each state. I have updated my estate plan for the state I plan to retire. I have a will, trust, financial power of attorney and health care power of attorney, HIPPA authorization . A will goes through probate court and a becomes part of public record. A trust passes outside probate and remains private and provides creditor protection for inheritance. I plan on making and prepaying for funeral arrangements. I have written my obituary. I also have designated who will receive personal property like jewelry and collectibles.
I have something I call a “Legacy Box” which I sent to my adult children. In it I list all the accounts which are paid automatically through my checking account. My heirs will be able to stop automatic payments. I have identified the location of all insurance, bank accounts and property tax information. I have listed my medications, allergies and doctors should I become incapacitated . User names and passwords to accounts. Important people to contact such as my estate lawyer ,accountant and friends. It is my goal to reduce stress for my family.
Kudos to a “plan ahead” lady! A key point to your outstanding planning is that you have set these things up while you still have all of your marbles. So many folks are suprised by a sudden incapacity and then it is truly too late.
I too will have to agree with the other comments that you should give your estate to your kids. If you have prepared them to be financially responsible, then why would you think that inheriting the money would be a financial burden? Adding all those conditions as to how much they will receive at what age and all the other “few things we are considering” is just another way to be controlling after you and your wife are gone. Yes, we know it’s your money and you can do what you want with it, but you are sending a message to your kids that you don’t trust that they have the ability to handle their own finances. You’re making things way too complicated for a few million dollars.
The will you did has a testamentary trust, which needs to be established by the probate court.
The main reason for a living trust is privacy and to handle affairs during incapacity as an adult guardianship/conservatorship is expensive and public.
Powers of attorney are necessary but can difficult to use.
As long as there are no surprises for anyone, you should give your kids whatever you want.
Name your kids as successor advisors on your DAF. They will enjoy that.
Trust and estate lawyers who are certified specialists have passed rigorous and difficult exams have studied brain swirling tax law, and are excellent guides. Do not be afraid to pay them.
I am in GA and did not know a lawyer to pull together the documents you mentioned last year. Our will was dated 1996 when the kids were minors and our parents were alive. After taking my wife to attend her first Dave Ramsey class sponsored by our church, one of his points was getting these documents done. This was a major hole in our otherwise good financial planning that allowed us to retire in our early 50s. We worked through these documents online via LegalZoom.com. The process was very straight forward for us and priced very reasonably. I imagine there are other similar sites, and really cannot recall where I heard about this site. We completed after the Dave Ramsey class last year. Then had a family meeting with our kids to let them know our wishes. I have been an avid investor in real estate and stocks/mutual funds/ETF since 1973 at age 18. I find it to be fun and challenging in the sense of doing research and ongoing investing education.
Thanks for all the great content, I was referred to your email/site via a fellow investor/pickleball friend in GA.
I have heard of Legal Zoom. Suze Orman and others have DIY have estate planning kits. My biggest concern is how reliable and accurate are these programs. After working and investing years, I want to make sure after my death survivors will have minimal problems. Paying to have a personal lawyer ‘s help is a small price because I am leaving a lifetime of my effort.
I’ve never used Legal Zoom, but there are many scathing reviews of them.
As usual, the comments section is often as educational (or entertaining) as the article itself. But, I’m disappointed (though not surprised) that some readers felt compelled to offer harsh opinions on the amount ESI plans to leave his adult children. That comes under the heading of “none of our bees wax.” None of us can truly know his family’s priorities or circumstances.
For the record, I think $500K is a hefty sum no matter how you slice it. We have received as much, though somewhat after we were already financially independent. Nonetheless it is very much appreciated.
We don’t have kids, but if we did, not even half would go to our kids (though I could see setting up a trust to see funds flow to multiple generations). With life insurance (some whole life too late to get rid of and some employer-provided), if we met an untimely death our estate would be north of $10mm. That is too much of a windfall in my opinion for anyone. But, its only an opinion of my wife and I, though its the only opinion that counts. No one in our estate plan gets more than $300K (not counting the $1mm life insurance trust I had set up for my late mother), and there aren’t many people in our plan, so if you do the math, that means the vast majority of our estate would go to charities. Every time someone gets cut from the will, a charity gets a little more 🙂
Over the years, I’ve helped a number of friends and family arrange their estate plans (I’m not a lawyer, just a trusted friend) and I’ve also been involved in the probate/after-death process a number of times.
As a result I’ve learned some things:
#1 – There is no such thing as “fair” or “deserving”. There is no “fair” or “deserving” amount to leave kids, siblings, friends, etc. There simply isn’t. The decisions are deeply personal to the giver, and the receiver should avoid the temptation to read much into it. Folks who automatically believe children should receive everything are simply wrong – there is not some cosmic law that decries this must be the case every time.
#2 – Money and possessions do not equal love. In some families, the amount they receive (or do not receive) is interpreted as a symbol of how much they were loved by the deceased. That is a recipe for a lot of cringeworthy misunderstanding and hurt feelings. Its human nature. Communication with beneficiaries before death is probably the best way to avoid this.
#3 – Where even small amounts of money or possessions are involved, much less the kinds of assets we are talking about on this blog, people can act really crazy and out of character. You combine grief with unresolved relationship issues and then pour on what may feel like a “competition” for assets, and its like a lit match in a room full of dynamite. Underlying personality and emotional issues come to the surface. The more room for interpretation, the worse the conflicts.
#4 – A strong, airtight plan and a good specialist lawyer are invaluable. Worth every penny.
#5 – If you can keep your assets from passing thru probate, do so. It is a clunky, bureaucratic, painstaking process. If you have assets across multiple states, its a disaster in waiting.
#6 – Forgot to add that I truly believe (and have seen) that financial windfalls can have truly destructive consequences. That is one of the reasons the bequests to individuals are limited in our plan. In general, people can go off the rails when something like a bequest radically alters their situation.
For those of you who are retired from the military, don’t forget that the JAG will create a Will for you at no charge. I had my Will done on the Base. Outside of my charitable giving, I have requested that I be buried with honors as a retired soldier.
I agree with your concern about spoiling your kids with money. That can certainly happen. But it seems a shame to give away so much money you worked so hard for and spent so much thought in building. You have an opportunity to help your family for generations to come to have a better life. You can set up a trust and control how much your kids and later descendants can receive from it so as not to ruin their lives. So many families struggle for generations to get ahead. Some never get ahead. It seems a shame to set them back at the start. Okay, $500k may not exactly be at the start, but it’s really not very much.
$500k is not enough if you are trying to live on that alone. My intention is not to give my kids enough to never work again. As someone pointed out above, $500k is a nice $20k extra per year. Not bad, but they still must work. I have no desire for them to be able to live a life of leisure when I pass.
Also, $500k at 30 to 35 has the seeds of a fortune in it. If managed well, it’s worth millions at retirement. If managed poorly, $2 million can be spent in a heartbeat.
Robert Connell says
I just created a living trust, finally, so everything can avoid probate. I created a will as well that just says everything should go to the living trust in case something was missed.
It was a lot simpler to set up than I was expecting.
I have have been following this thread since my comment earlier in the week and it is fascinating to see how much “advice” you have been given on what to do with YOUR $ which per the article you already spent months talking about with your wife 🙂
Personally I need to think a lot more about my plans when I redo my will to a living trust but I always remember telling my parents when I heard they were creating a will in my early 20’s to enjoy their money they had worked hard for and I didnt want any as it felt weird (and still does) to “profit” out of death of a loved one and told them that anything they left me I was going to give to charity and keep in mind at the time my net-worth was NEGATIVE 20K. It was always important to me that I made it financially on my own without anything given to me ($ wise) and looking back that helped in many of the successes I have had (and got a lot of luck along the way)
As far as my kids I would be more open to giving them more if they were self sufficient and not expecting they “deserved” it or were “entitled” to it and at the same time what some of the commenters are maybe not appreciating is 500K + a paid for college education + growing up in a FIRE household + living in the US (Buffett has some good insights on this) means they have ALREADY hit lottery and it is up to them to take advantage of it.
Also find it a bit sad with the demographic that reads this blog, the number of millionaires you have interviewed and the fact that you are willing to match up to 50K (very generous) that you have only raised $6,687 and seeing some of the comments gives me the sense charity starts at “home” even if the family members don’t really need it.
Thanks as always
I think it is great ESI is willing to match up to 50K to charity. I think the Salvation Army is a wonderful charity. I have charities I select at the beginning of year that I give donations through the year. I usually do not add any additional charities latter.
[email protected] says
Hard to believe that ESI is being shamed for giving so much to charity in his will. I mean, wow, trying to shame someone who is giving to the less fortunate. That is a new one… Course, ESI won’t be shamed though.
He has taught his children how to become self sufficient. If they heed his advice and grow their own wealth, then they will be fine with or without his will. If they do not and are foolish with their money, then his will will protect the money that he has worked hard for and go to the charities of his and his wife’s choice. It seems that he would not want his millions to go to the children that were foolish with their money.
Seems pretty smart and financial sound. Kudos!
Nice topic and full of “advice” in the comments.
[email protected] says
Congrats on getting your will done and sharing the details. Very interesting how passionate your readers are in judging your choices.
Statistically, most inheritances are blown in less than 2 years.
My cousin informed me when we were young that we would all be rich after we inherited our grandfathers money. When our grandfather passed at 99, his money/property was distributed to his 4 children, $250k each, this money that he spent a lifetime accumulating is gone within 5 years.
My cousin that thought he was going to be rich, inherited $200k from his mother who passed shortly after my grandfather. The money was gone in less than 2 years, he quit his job, invested in a funny car.
If I had inherited the same $200k that my cousin did at that point in my life, it may have altered my future, I may not have taken advantage of the opportunities that were waiting for me and my true destiny, I would not have blown it, but I may have taken my foot off the gas peddle. My NW is $3.5M and I am happy I did this on my own.
My grandfather had already left me my inheritance, he set a good example of living below his means, saving and investing.
My observations echo’s yours, not always but often enough the inheritance is blown when it goes to someone who does not have ESI discipline to begin with… basically those who “need” the money the most are the most likely to blow it and have it not change a thing except a new higher standard of living that cannot be sustained.
Still, funny cars are pretty cool, though.:-)
[email protected] says
They are cool, unfortunately my cousin invested in someone else’s Funny Car, he did not invest in his own, I am sure the person that received the funds was laughing as well.
I am of the same value set as ESI in giving back now ($50k match) and not just to get to it “someday.”
ESI – if you don’t hit your match goal with your reading audience, I hope you will reach out directly to the Salvation Army and see if they will share the match in your local community.
I have used this strategy effectively with the charities our family supports. I let the charity know we will do a match of $X for Z amount OF time. The charity sends an email blast to their donors. The past couple of years this has led to an equivalent of 3x the donations (my donation, contributions by other donors, my company matching 1:1 – no limit).
Thank you for continuing to spread the word on the importance of giving when one is financially able to do so.
Catching up with all of the responses to this post and I am surprised as well by some of the comments. I wonder if it comes from our personal (and cultural) experiences/histories. My husband are of different non-American cultures. In our families, if there is any money when one passes it is left to the children, I don’t think anyone would even consider doing something else. It’s important to note our families do NOT have large sums of money, so inheritances have been very modest.
We are both in the US now, live below our means and are financially stable. In my millionaire interview, one of the questions I asked is how do we handle the likely significant legacy we will leave behind (but one can never know for sure)?
This post has given me something to think about, what amount is the right amount to leave to family members? And what to do with the rest? I have no answers yet, but will definitely bring up this topic with our children as they complete college and have established themselves.
Some great discussion points in this post! We are about to revise our estate plan. We did do a trust a few years ago. We like the idea of a cap for the kids and need to pick that amount. We did open a DAF last year so need to switch our plan to have everything remaining land there instead of pulling out the charitable giving first. Thanks for the ideas!
I was left a trust a special needs trust( for disabled). I am disabled but my impression from the trust company is I have to be on all public services in order to utilize it ( they will not share a copy so I have no idea how to comply). My problem is IAm disabled but SSDI not SSI. My understanding is the trust was set up incorrectly assuming this; what do I do? I’ve consulted a special needs attorney who will only continue if I pay him his $200 consultation fee, and the trust company has to comply,which they won’t. What am I missing? My sister who is the attorney who assisted in setting up the trust said it was the only way to include me. At least everything I’ve seen it’s wrong,and I don’t know what to do? Could you offer me some advice. Anything would be so appreciated. I live on my disability which comes from my work record. I’d like to move to Washington state where my children are but my income is $3 more than what they consider low income my current state Colorado I don’t qualify for services either. I’m told it’s there isn’t anything that a physical disability person can qualify I’m under 65 and on Medicare. There aren’t any services for me. Because I’m a Medicare recipient
not Medicaid and as I said Social Security Disability based on my work record no other income.
Again anything would help I’m just trying to understand this. Also more than happy to fill in any blanks I’ve missed
Special needs just makes no sense especially when there is no one to administer it just a trust company who apparently knows very little about Social Security. I am the eldest of 10 and according to my one of my siblings ,who is an attorney,this was the only way I could be included, who was also part of setting it up.
If you don’t have $200, you aren’t moving anywhere. Just a guess, but your sister-the-attorney has told you exactly what you need to do, and you don’t like it. Now, the advice you asked for:
1) Don’t get loaded on New Year’s Eve, or today.
2) Call your sister the attorney, it is the holidays. Comply, and she will help you. Don’t comply, tell her all the reasons you “can’t” or are “confused” and she won’t help you. Don’t call your kids, let them call you if they want to.
3) On January 2, go to the Social Security office, the same one that granted-and-continues-to-approve your SSDI. If what you say is accurate, they will hook you up with legal advice, point you to other public services, and get you on track. Contact your utility companies and get on their low-income rate programs.
You shouldn’t have an “impression from the trust company.” Or an “understanding.” Or need a “special needs attorney.” If your physical disability for SSDI is substance-related, you are very fortunate to have a family that has restricted your access to funds with a ‘special needs trust.’ This can be your wake-up call to change, and I hope it is.
Too bad your the type of person that assumes the worst of an individual because of SSDI. I’m a CANCER SURVIVOR of the worst kind and never in my life used it as a crutch or excuse! I was diagnosed with brain cancer at age 5 in1975 and have had a total of 36 surgeries spending the majority of my life in a hospital and survived odds that were in the single digits. I attempted to work as well as college only to end up in the infirmary anemic or fired from my job because the ADA had not come into effect yet. My SSDI is based on my work hours not illness. I have never used it as a crutch . My sister did not do her ” do diligence” on me and find out I had a work record. THERE IS NO SUBSTANCE ABUSE OR ALCOHOLISM. I grew up with a neurosurgeon that didn’t believe in pain killers. I either toughed it out or was given the mildest of doses and as a result have an extremely high pain tolerance.
I do suffer from depression. Would’n you after all I’ve been through? She took advantage of an ailing parent on their death bed by not looking further into me she’s 15 years younger and never bothered to find why I use a cane or am blind. I’ve been on SSDI for 28 years there’s no going back and asking anyone, not that I haven’t tried. All its gotten me over the years investigated by the state for potential fraud, because if you understand these programs as I’m assuming you do; they are not easy to get on. I was removed from food stamps as well as several others because of the time I’ve been using g them. Fair no but it’s the county. An individual with no financial standpoint except legal aid has no fighting chance.
As for the trust company that holds my SNT they’re clueless as I have repeatedly found out and were surprised to find out I was SSDI. Thank you for confirming what I have always experienced.
You see a disabled person and immediately think the worst of them. Don’t judge a book by the cover.
I highly doubt you will even read this but my satisfaction of putting it down was worth it for me.
This is on my todo list this year. 😉
I didn’t read all the comments, but I think your plan is good. $500k is not bad at all.
I especially like the 30, 35, and 40 separation. I’ll copy it for our son.
We’ll put some toward donation, but not a huge percentage like you. That’s very admirable.