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Legal Eagles and others....Trust fund for support/education on death of parent?

Posted by on May. 16, 2014 at 12:24 PM
  • 22 Replies

I attended a very interesting course Wed night "Legal Considerations in the Foreign Service". Covered basics of wills, trusts, POAs, domicile, yada yada.  I'm in "get our legal crap in order" mode right now so it was very informative and the gears in my mind are turning.  But we didn't get to the section I was most interested in as the course ran long--legal and financial considerations for children. So I'm interested to hear how you guys have things set up to provide for children in the event of a parent's death when the parents are divorced.

Our sitch:

Before I moved in with DH (and got rid of my house), I insisted that he draw up a will so that in the event that he got hit by a bus or something and died, I would at least not be immediately homeless (transfer of deed on death type thing).  The plan in the past was that if DH kicked the bucket, the LI payout would go into trust to support the kids til they were college age and then go towards their college expenses with any remaining balance to be split between the kids when they turned 26.  I was named as the trustee.  There is nothing in the CO about DH having a policy payable to BM.  There is nothing in the CO (that I'm aware of) regarding payment for college education.

A lot has changed with our situation since the will was first done so we need to redo it and I plan to sit down with an attorney sometime soon. At this time, we do not own a home, I am not working, and there is no LI policy on me anymore. I have no debts in my name. We do have a LI policy on DH and a retirement account and I'm the sole beneficiary of both. Because I'm not working and most likely will not be while we are abroad over the next 17 years til he is retirement age (FS kicks you out at 60) my SS benefit (if it still exists when I'm of that age) will be pretty low.  And because DH had to cash out his previous retirement plan to pay to BM, we are getting a really late start on that as well.  So thinking longer term, a LI policy really needs to be something that can get me on feet and potentially provide for me post retirement to a large extent. 

It is important to us to make sure that the kids are provided for though.  We cannot get more than 500k in LI through most companies on DH due to the safety issues with his job, and some won't insure at all.  So if you figure about 24k/year in CS/expenses til kids are 18/graduate HS, that's 100k, and college costs at our state's school right now are about 22k/yr with room and board (and going up every year), we'd want to have at least 300k available at minimum for the kids to keep things status quo.  I'm thinking that maybe we need to have more than one LI policy.  One payable into a trust that we set up NOW for the kids and then one LI policy that goes to me.

DH's parents and BM's mom are all reasonably wealthy so even if we did no planning, I have no doubt that the kids would be cared for.  But it really is our responsibility so trying to figure out the best way to go about this.







by on May. 16, 2014 at 12:24 PM
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Replies (1-10):
OvrMyHead
by Silver Member on May. 16, 2014 at 12:37 PM

We are doing our wills now.  I have 2 kids and DH has 2 kids.  Each child currently has their own college fund that will cover a lot of college.  DH and I both work, we both have LI and retirement savings.  If either of use dies, our estate will be split 3 ways--1/3 to the spouse, and 1/3 to each of our children (DH is leaving to his kids, I am leaving to mine).  So, each of my kids will have their college fund plus 1/3 of my LI plus 1/3 of my retirement.  The money will be provided monthly for their care while they are minors and when they are 30 they can inherit the remaining.

In 10 years, we are going to change that to where the spouse gets more of our estate (like 50%), since the kids should be independent by then.

The house will go to the spouse.

Birdseed
by Platinum Member on May. 16, 2014 at 1:08 PM

One thing that I learned in the class is that wills are becoming less and less necessary because if handled properly, most assets can avoid going into the estate and probate and not even need to be determined by the will.  Also, in some states, it's really really wise to avoid having ANYTHING needing to be determined within the will itself especially if anyone named in the will (or the executor) is out of state.  State issues though.  Anyway....




Quoting OvrMyHead:

We are doing our wills now.  I have 2 kids and DH has 2 kids.  Each child currently has their own college fund that will cover a lot of college.  DH and I both work, we both have LI and retirement savings.  If either of use dies, our estate will be split 3 ways--1/3 to the spouse, and 1/3 to each of our children (DH is leaving to his kids, I am leaving to mine).  So, each of my kids will have their college fund plus 1/3 of my LI plus 1/3 of my retirement.  The money will be provided monthly for their care while they are minors and when they are 30 they can inherit the remaining.

In 10 years, we are going to change that to where the spouse gets more of our estate (like 50%), since the kids should be independent by then.

The house will go to the spouse.


adamsmom0116
by Member on May. 16, 2014 at 1:26 PM

Dh's CO says nothing about LI or death, other than, in the event of the death of one parent, the kids are to go to the other parent. Kind of a duh statement.

DH and I both have wills. His says that in the event of his death, the house and his retirement and all assets (with the exception of a few specific ones which are spelled out in the will) will go to me. Life insurance is to go to me. I am instructed to "make sure the kids are provided for." They will then be living with their mother (the 2 that are still in HS, that is). She and SF are more than financially able to provide for them, so DH and I have discussed setting up a trust FBO the kids that I would put their money into and disperse on a set schedule. If I precede DH in death, everything is split 5 ways, equally among the kids.

My will says that if I pass, DH gets it all. If he precedes me in death, everything goes to DS, who is currently 8, so actually right now it goes to my brother who is DS's caretaker in the event he becomes an orphan.

Life insurance is the same way. We also have a LI policy on BM. Because some of the kids are under 18, DH is the beneficiary and would distrubute among the kids equally, and as needed (based upon their age, responsibility levels, financial needs.....)

faerie75
by Platinum Member on May. 16, 2014 at 1:32 PM

 party boy (BM's "baby daddy") gets over 2000 a month in survivor benefits for his two girls mother being dead. since i am po' that is my plan.

faerie75
by Platinum Member on May. 16, 2014 at 1:37 PM

 lol call me a creep but id never think of things like this. if i kicked the bucket my kids BD will figure shit out. my family and his family are both close knit. they will come together. and if SO kicked the bucket. BM would get the ss survivor benefits for 3 kids plus she has a rich gma.

Birdseed
by Platinum Member on May. 16, 2014 at 1:49 PM

I don't think you're a creep, but I do think that responsible parents make plans to make sure that their child(ren) will be cared for should they pass unexpectedly. When you have minor children, it just makes sense (to me). 

It's not uncommon for younger people to not (want?) to think about these things but the truth is, when you don't, you are placing your responsibility onto someone else who may or may not be in a position to do it.

For me, I don't have wealthy family members to help me out if my DH passed at this point.  So there is also that component.  I realize that it's a bit of a special situation because of the fact that I can't work if I want to be with DH, but in general, I think it's wise to consider these things.

Quoting faerie75:

 lol call me a creep but id never think of things like this. if i kicked the bucket my kids BD will figure shit out. my family and his family are both close knit. they will come together. and if SO kicked the bucket. BM would get the ss survivor benefits for 3 kids plus she has a rich gma.


faerie75
by Platinum Member on May. 16, 2014 at 2:02 PM

 i think its also that we are working lower middle class. we really dont have extra for these things. im sure my sister has this shit covered.

Quoting Birdseed:

I don't think you're a creep, but I do think that responsible parents make plans to make sure that their child(ren) will be cared for should they pass unexpectedly. When you have minor children, it just makes sense (to me). 

It's not uncommon for younger people to not (want?) to think about these things but the truth is, when you don't, you are placing your responsibility onto someone else who may or may not be in a position to do it.

For me, I don't have wealthy family members to help me out if my DH passed at this point.  So there is also that component.  I realize that it's a bit of a special situation because of the fact that I can't work if I want to be with DH, but in general, I think it's wise to consider these things.

Quoting faerie75:

 lol call me a creep but id never think of things like this. if i kicked the bucket my kids BD will figure shit out. my family and his family are both close knit. they will come together. and if SO kicked the bucket. BM would get the ss survivor benefits for 3 kids plus she has a rich gma.

 

 

 
        
         

jules2boys
by Gold Member on May. 16, 2014 at 2:07 PM

I would LIKE to be as you are, getting all this legal stuff situated as it should be, but, sadly, I haven't yet.  I've known I should for nearly 10 years now but... I haven't done it.   :(  I have no money to set up what I want/should have set up. 

In an ideal situation, this is what I'd have set up. 

A will that would direct that nothing would change for the boys.  We currently live with my mom.  She'd keep the boys, along with xMIL's help (as she does now) and BF would keep his normal one overnight a week.  This would work in our situation only.  I don't believe BF wants or could handle the boys 7 days a week.  He didn't when we were married (if I wasn't home he took one/both boys to his mom and 'disappeared' into another room) and now, he can't handle their schedule.  Neither boy would live with SM anyway, they'd fight tooth and nail to not leave school, friends, ECs, church, etc. and not to live with SM.  I don't believe BF would fight this either.  I do know he loves the boys, but, he's not 'ready' to have them full time.  My guess is, he'd 'fight' this for all of about 2 weeks, and within the first two weeks after my passing, he'd bring the boys back to my mom and all would go back as it has been all this time.  SHE'D have a huge change in her life, as she does little with/for them outside of what she wants to do with/for them.  They are MY kids, not hers, and I don't leave them with her, I don't ask her to do things for them (outside of an emergency), she doesn't pay for them (outside of wanting to pay for certain things, totally her choice/option, as it is xMIL or xFILs option as well, but I'd never ask any of them for anything), she gets to be 'grandma' while sharing a roof with them.  She makes YDS11s lunch but that's something she and he started long ago.  xMIL takes YDS11 after school each day.  He CAN stay home alone but likes being at her place.  It won't be long (another year or so maybe) and he'll have too much going on after school, like ODS16, to spend much time with her, so they're both soaking it up now.  They're quite close.  (does this make sense?  my mom and xMIL don't 'help' unless it's their choice to do so.  I don't 'dump' the boys with either woman but I allow the relationships to go on as each of them would like). 

Financially I'd have either the boys Godfather or my brother handle their finances (a living trust set up).  I learned from an aunt (who is a laywer focusing on wills, trust, probate, etc.) long ago that it's wise to have someone separate (but fair, relatively unbiased) handle the finances instead of handing the finances and the children to just one person.  I trust my BM completely BUT, I do/did not want to put her in a position of discussing finances with my XH should he want/need funds for the boys and should he actually step up and take full custody of the boys (doubtful but one never knows when another will actually grow up). 

I'd have life insurance set aside for each boy to cover living expenses until they are 22 (as long as they're in school full or part-time (half-time, not one course only), college or trade school wouldn't matter to me) and I'd have money in there set aside to help with college (Ideally I'd like to offer half their expenses while they work for the other half). 

But, again, I don't have the life insurance set up that way (I have a small policy through work but it wouldn't cover much for long).  I don't have the will set up (I have it written, but not notorized or filed legally) but my wishes are known by my mom, xMIL, and my brother (who are all in agreement and would support this should XH want to fight with the boys over it).  I've told XH about this (long ago) but doubt he thinks about it or remembers it (he avoids talk of death at all costs).  

Growing up I knew that in my parents will, should they both die, I'd go live with an aunt/uncle of mine.  I lived in fear that my mom would die because I knew my BF wouldn't keep me (and that would be a blessing!) but I didn't want to live with my aunt/uncle either.  I liked them (love them actually) but, we were SO different and it was all I could do to spend a long weekend at their place when I was growing up, the few times I did it. 

Ugh Bird.. thanks for the reminder of what I need to get in place, sooner rather than later.  Yeah... thanks... something else to add to my to do list.. ;) 

Birdseed
by Platinum Member on May. 16, 2014 at 2:37 PM


Quoting jules2boys:

Ugh Bird.. thanks for the reminder of what I need to get in place, sooner rather than later.  Yeah... thanks... something else to add to my to do list.. ;) 

That is EXACTLY how I felt after this course.  Like "Okay, let's go ahead an add 50 more things to my already long list of shit to take care of while DH is gone and can't be of any freaking help."

One of the biggest take home messages I got from the course was to avoid at all costs having anything needing to go into probate with the will.  Try to protect any assets or LI or whatever such that they do NOT enter into the estate.

When it comes to custody, I'll tell you that 5 years ago when we did our will, DH wanted the kids to continue staying with me--basically take over his custody.  Without the OP agreeing to it (in our state) that is not something that would be honored. We do have a notarized declaration by BM that she agrees to that.  But in your case, if your ex wanted to fight it, no matter what you state in your will, he could and would probably win

For Faerie if you're still reading...you don't need to have assets to need a will or LI or do planning.  We don't have any assets really.  The contents of our house, that's about it.  But if you have kids, it's very wise to get life insurance.  If you're young, it's not that expensive to get a reasonable term policy.  But really...funerals are pricey. If you depend on an income from one person to support everyone, it's especially important.  You really want to be able to have at least 6 mos of expenses covered. 


jules2boys
by Gold Member on May. 16, 2014 at 3:20 PM

This I know.  It wouldn't hold up in any court, anywhere.

But, I also know my kids, and BF.  He will NOT fight them on it if they don't want to go and, they would NOT want to go. They would NOT want anything to change (about where they live, go to school, friends, ECs, church, etc.). 

Heck, he doesn't even fight them anymore when they want to have a sleepover on his one night a week overnight.... he doesn't like to argue.  The boys would NOT go with him.  They will NOT live with SM.  He'd probably cry (I know he would, he's a crier) and beg them to come live with him, and they'd argue with him about it.  Both would tell him they aren't going, and he doesn't have it in him to insist. 

And, at 11 (nearly 12) and 16, CA courts won't split up siblings (usually) and ODS is old enough to be asked his opinion, should it come to that, or at least  have his opinion considered.  YDS is very well spoken as well.  

But, I was told long ago, if I didn't put it in writing, I'd be gone then and no one would know what my wishes were to even begin to ask the right questions.  So, I have them in writing (though not legally binding).   

Quoting Birdseed:

 But in your case, if your ex wanted to fight it, no matter what you state in your will, he could and would probably win

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