jitterbug
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Post by jitterbug on May 11, 2021 14:25:13 GMT -5
This has all just happened this week, so we're still processing the information and I need to talk it out somewhere - so you guys are it!
Twenty six years ago, my husband passed away unexpectedly. He had life insurance and I managed it well. We are very middle class people and I lived below my means, so by the time I remarried 11 years later, it was a substantial amount of money. There is a pre-nup in place and our estate is set up so that when I die, my only child inherits what I was worth the day I got remarried (a named sum) off the top and then all the growth and anything else we accumulate goes to my husband - with the intent that when he dies, all of that is split between his kids and mine. But that is a verbal intent, not in writing anywhere official.
Our total net worth is now 3-4 times what my son will get when I die - but we are basing our upcoming retirement on all of the money, as we are counting on the low end of the earnings spectrum. I know it is a concern of my husband's that if I die, he may suddenly be retired with much less money than we had planned on, so his solo retirement could look much different. And I have now been with my 2nd husband for 15 years and it's going well - so I definitely do want to make sure he's okay if I die first.
Fast forward. My son's grandmother just passed away. My first husband was an only child and my son is her only grandchild. He just found out he's the sole heir - and that the sum of money that she's left him will set him up for life. (It is almost twice the sum of money that he'll get from me). It is a fantastic gift and could change the course of his life.
I've been mulling this over for a while now and this new news makes me think I should take some sort of action. I 100% believe that the money I have came from my son's dad and it's due to him in it's entirety. Eventually. (And it has never been co-mingled). But I'm wondering if I should set up some sort of trust, so that when I die I can have it set up so that maybe my son and my husband each get half the income from it each year - and upon my husband's death, it then goes entirely to my son? And/or do my husband and I need our own trust, as we each want to ensure that when one of us dies, the other one's children get their share of the whole estate when the remaining spouse passes? I want to know that even if my son doesn't remain in contact with his stepdad, that he'll eventually get his final share of our estate.
I guess I don't quite understand how trusts work - but I'm thinking I should have one?
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swamp
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Post by swamp on May 11, 2021 15:53:47 GMT -5
I think you need a lawyer and a financial planner.
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kadee79
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Post by kadee79 on May 11, 2021 16:08:17 GMT -5
I agree with Swamp. And you need to sort out your feelings before you see either or both.
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CCL
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Post by CCL on May 11, 2021 17:10:15 GMT -5
How old is your son, 30 or so? How much money are you talking about, $50k, $500k, a mil? What about life insurance? How close are you to retirement? Lots of things to consider.
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tskeeter
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Post by tskeeter on May 11, 2021 18:44:22 GMT -5
Jitterbug, you desperately need to spend time with an attorney doing some estate planning and putting that estate plan in writing.
I’m sure that your first husband had insurance in order to provide for you and his son. Providing for your second husband and the children he had before you were married probably never entered your first husband’s mind. Something you might consider as you plan.
Regardless of your son’s need, bear in mind that many, many people measure how much they are loved by how their parents provide for them financially. Is it possible that your son might interpret you providing for husband number two and his children while disinheriting your son as an indication of how you valued him compared to other members of the family?
Putting your estate plan in writing is critical. If, by chance, husband number two were to outlive you by just a few hours, and both of you die without written estate plans, state law might require that husband number two’s children inherit the entire estate that you and husband number one created and your son could be excluded. Relying on verbal agreements is a really bad idea because your current spouse may not be in a position to implement what the two of you agreed to.
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dannylion
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Post by dannylion on May 11, 2021 19:19:26 GMT -5
Definitely seek professional help. Consultation with an estate attorney would likely be a good investment for all concerned. Since the amount of money appears to be substantial and there are several moving parts, there are going to be issues you haven't considered or don't even know to ask about. An estate attorney or a practice that handles estates (which often includes financial advice and planning and accounting services as well) will be able to navigate the process for you and help you avoid pitfalls.
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gs11rmb
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Post by gs11rmb on May 11, 2021 19:20:46 GMT -5
I think the money/life insurance you inherited from your first husband is a legacy for your son. Your concern for your husband's welfare is natural and I understand why you want to make sure he is financially comfortable. I'd recommend a life insurance policy in the amount that will go to your son when you die.
In case you think I'm not sympathetic to widowed people remarrying, I can assure you that's not the case. My mother died at 48 and my dad remarried a decade later to a woman who was also widowed. The plan, which I don't even know if it's in writing, is that the surviving spouse inherits everything and when he or she dies whatever is left, including the house, will be divided by the four children. If my dad goes first, I have zero objections to my stepmother using all the assets to ensure she is cared for because she's a truly lovely woman. I do think I'd feel a little differently if my mother had left money (even if not in writing) specifically for my sister and me because that would feel like our inheritance. Right now, everything that dad has contributed he has earned so I feel no moral claim.
Imagining myself in your son's shoes...I'd be very upset with your plan.
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Miss Tequila
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Post by Miss Tequila on May 11, 2021 20:12:33 GMT -5
Jitterbug, you desperately need to spend time with an attorney doing some estate planning and putting that estate plan in writing. I’m sure that your first husband had insurance in order to provide for you and his son. Providing for your second husband and the children he had before you were married probably never entered your first husband’s mind. Something you might consider as you plan. Regardless of your son’s need, bear in mind that many, many people measure how much they are loved by how their parents provide for them financially. Is it possible that your son might interpret you providing for husband number two and his children while disinheriting your son as an indication of how you valued him compared to other members of the family? Putting your estate plan in writing is critical. If, by chance, husband number two were to outlive you by just a few hours, and both of you die without written estate plans, state law might require that husband number two’s children inherit the entire estate that you and husband number one created and your son could be excluded. Relying on verbal agreements is a really bad idea because your current spouse may not be in a position to implement what the two of you agreed to. I agree 100%. I’m also going to say that you never know if your spouse will live up to a verbal agreement. If you asked me 10 years ago if I left my assets to my then husband, I would have sworn he would have used the money to take care of his children. He now has a new wife, never sees his kids and spends lots of money taking his new wife on expensive vacations. I love my current husband with all my heart and I know he is a good man. However, I am in the process of having a trust set up to solidify my children’s inheritance. I guess I’m jaded but I would never trust that someone would follow through with my wishes once I’m gone. And I would be livid if my assets weren’t given to my children but to a second spouse.
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Miss Tequila
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Post by Miss Tequila on May 11, 2021 20:13:53 GMT -5
I think the money/life insurance you inherited from your first husband is a legacy for your son. Your concern for your husband's welfare is natural and I understand why you want to make sure he is financially comfortable. I'd recommend a life insurance policy in the amount that will go to your son when you die. In case you think I'm not sympathetic to widowed people remarrying, I can assure you that's not the case. My mother died at 48 and my dad remarried a decade later to a woman who was also widowed. The plan, which I don't even know if it's in writing, is that the surviving spouse inherits everything and when he or she dies whatever is left, including the house, will be divided by the four children. If my dad goes first, I have zero objections to my stepmother using all the assets to ensure she is cared for because she's a truly lovely woman. I do think I'd feel a little differently if my mother had left money (even if not in writing) specifically for my sister and me because that would feel like our inheritance. Right now, everything that dad has contributed he has earned so I feel no moral claim. Imagining myself in your son's shoes...I'd be very upset with your plan. Exactly. If the deceased spouse leaves assets earmarked for their child, it should go to the child.
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billisonboard
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Post by billisonboard on May 11, 2021 20:19:43 GMT -5
I can see current hubby being concerned about retirement on only 3 or 4 million, but I say he should be okay.
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resolution
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Post by resolution on May 12, 2021 8:46:53 GMT -5
I get the impression that you both felt that your husband would be fine with the current plan until your son inherited the other money. Has there been some other change to make the current plan unworkable for him?
I agree there could be some emotional impact from your decision, regardless of everyone's financial standing. I spent my whole adult life with my parents telling me and my sister that they are splitting everything 50/50 when they die, but last year they changed their minds and decided to give her a higher percentage since she has kids and her oldest now has a child. I told them it was their money and I had no problems with it. I feel a bit left out and it stings a little bit. I will never tell them that though.
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Deleted
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Post by Deleted on May 12, 2021 9:09:19 GMT -5
Definitely see a lawyer experienced in these things. I've been to two (first one retired and I needed an update after DH died) and they both asked very good questions, making me think they've seen a lot of horror stories.
In my case, I wanted to provide for DH in the unlikely event I predeceased him. I set up a revocable trust. In a way it would have been taking away part of DS' legacy and some of my money had come originally from the sale of the marital home when the Ex and I divorced (down payment cam from an inheritance from his mother), which I put down on another home, which appreciated considerably and sold at a $200K profit. Most of that got invested when we moved to a lower-COL area. So yeah, technically, it was the Ex's money to start with but many years of additional working and saving as well as investment gains muddy the waters a lot. Fortunately DS understood that. Second DH was a spectacular stepfather and neither of us wanted him to live out his old age in poverty if I went first.
A lot depends on how your son would feel about his potential legacy being reduced to make sure that your current DH can live decently if you go first.
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thyme4change
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Post by thyme4change on May 12, 2021 10:57:33 GMT -5
Was the life insurance intended to raise the kid and get him into adulthood or was it meant to be a lump inheritance to a grown man later in life?
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billisonboard
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Post by billisonboard on May 12, 2021 11:24:43 GMT -5
Who is your son financially? Is he, "I have a million in the Bank of Mom so I don't need to save for retirement" or is he, "I know I have the potential to inherit money but I am planning things out not counting on it"?
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NoNamePerson
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Post by NoNamePerson on May 12, 2021 11:28:54 GMT -5
Throw in a good CPA who will look at tax consequences that are often overlooked by lawyers and financial advisors.
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haapai
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Post by haapai on May 12, 2021 12:04:15 GMT -5
I agree with Swamp. And you need to sort out your feelings before you see either or both. Counselors can be very helpful in sorting out your feelings. It's safe to talk with them about silly, petty stuff and if they are any good, they'll give a good kick in the butt regarding seeing a financial planner.
You did well managing the proceeds of your first husband's life insurance, but now you need to do some more thinking and planning. A counselor can help get you unblocked.
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laterbloomer
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Post by laterbloomer on May 12, 2021 13:36:21 GMT -5
Your son's other inheritance should not really influence your estate planning. IMO That would be like punishing him for it.
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Deleted
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Post by Deleted on May 12, 2021 14:54:57 GMT -5
If my children’s’ father had died when we were still married, I would’ve felt that whatever he left was for me and our children. Whatever I didn’t spend raising them, I would want to go to them upon my death, as a gift from their deceased father. Unless there was some real medical reason why I couldn’t work and take care of myself, and needed to use the money. I would think that was ok, since I’m a member of the original family that the money was meant for.
Even if my children became wealthy on their own or through another inheritance, I would want them to have what their father left for us. Even if it’s peanuts compared to what they already have. To me, that would be honoring what he had put in place to take care of his family if he died, not so much about the money itself, but more about their Dad trying to look after them, even after he died. I think it matters what people intended when they leave assets to their loved ones upon their death, and I believe it should be honored as much as reasonably possible regardless of who comes into our lives afterward.
So if I remarried, I would still feel like that money was for my children, from their Dad. My new spouse and I would have to hash everything out without my children’s inheritance from their Dad being on the table. Period. And if he had a problem with that, we’d have a major problem. We can split everything we build together between ourselves and our children, with the bulk of it going to the surviving spouse and whatever is left after we both die, being split between all of our children.
Just the thought of the situation being in reverse and my children’s father using money I’d left after my death to support a current spouse instead of giving or leaving it to my children upsets my nerves majorly. And I would feel the same if my spouse was a widower whose deceased wife left money for her family. I’d want it to go to their children, I wouldn’t want it.
All that to say, I don’t believe your son’s inheritance from his Dad should be considered at all in how you and your husband work things out. It doesn’t matter at all that your son recently received an inheritance from his grandmother. And me personally, if I was you and my spouse thought he was entitled to some of that money (not saying your husband feels that way), I’d be looking at him real crazy. That’s just me though.
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Deleted
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Post by Deleted on May 12, 2021 15:02:58 GMT -5
I get the impression that you both felt that your husband would be fine with the current plan until your son inherited the other money. Has there been some other change to make the current plan unworkable for him? I agree there could be some emotional impact from your decision, regardless of everyone's financial standing. I spent my whole adult life with my parents telling me and my sister that they are splitting everything 50/50 when they die, but last year they changed their minds and decided to give her a higher percentage since she has kids and her oldest now has a child. I told them it was their money and I had no problems with it. I feel a bit left out and it stings a little bit. I will never tell them that though. My son doesn’t have any children, my daughter has 3. My daughter has also been a been a bigger drain on my resources as an adult than my son. Almost everything I’ve done and do for her as an adult, I’m really doing for my grandchildren. Because of that, I already feel like things aren’t fair for my son, because he’s not as needy AND he doesn’t have children. They are both my beneficiaries, split 50/50. I keep saying I need to update my stuff, because I’d like to include my grandchildren. But anything I leave them specifically, will come out of DD’s half. It doesn’t seem fair to continue to “punish” my son even after my death, for not having children.
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billisonboard
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Post by billisonboard on May 12, 2021 15:21:24 GMT -5
This is a throw it out there and see how it sounds.
Why set it up as "upon my death"? Why not give a fair allocation when each child becomes an adult? I am thinking give them some time to launch so ... 25?
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billisonboard
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Post by billisonboard on May 12, 2021 15:37:28 GMT -5
I get the impression that you both felt that your husband would be fine with the current plan until your son inherited the other money. Has there been some other change to make the current plan unworkable for him? I agree there could be some emotional impact from your decision, regardless of everyone's financial standing. I spent my whole adult life with my parents telling me and my sister that they are splitting everything 50/50 when they die, but last year they changed their minds and decided to give her a higher percentage since she has kids and her oldest now has a child. I told them it was their money and I had no problems with it. I feel a bit left out and it stings a little bit. I will never tell them that though. My son doesn’t have any children, my daughter has 3. My daughter has also been a been a bigger drain on my resources as an adult than my son. Almost everything I’ve done and do for her as an adult, I’m really doing for my grandchildren. Because of that, I already feel like things aren’t fair for my son, because he’s not as needy AND he doesn’t have children. They are both my beneficiaries, split 50/50. I keep saying I need to update my stuff, because I’d like to include my grandchildren. But anything I leave them specifically, will come out of DD’s half. It doesn’t seem fair to continue to “punish” my son even after my death, for not having children. My grandmother bequeathed money directly to her children and grandchildren, all adults. She did not give to great-grandchildren. Her children each got the same percentage. Same but smaller with the next generation. I can see where if the money had actually gone to my parents "for me", it could be seen as not fair. But with it going directly to each of her grandchildren, it wasn't seen that way.
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HoneyBBQ
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Post by HoneyBBQ on May 12, 2021 17:00:57 GMT -5
Your son's other inheritance should not really influence your estate planning. IMO That would be like punishing him for it. I don't necessarily agree. I think jbug needs to be honest with both parties and tell them of her intentions and that it comes from a place of love. I think that it can be managed. Circumstances change with time (and money) so it doesn't have to be presented as a punishment - but more of an evening of things out. Definitely consult and discuss with professionals and all the parties who may inherit. If my daughter won the lottery and won 10 million bucks, I would worry a heck of a lot less about her inheritance and might give more of my money away, etc. Since she is 'taken care of' all she has to do is be smart and she has her own legacy. She doesn't need mine. We always say children shouldn't count on inheritances anyways, so the fact jbug's child already received one- he doesn't get to claim a second. It's up to Jbug and her concerns about her current spouse's standard of living are valid. Sounds like there's enough money to go around to me.
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gs11rmb
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Post by gs11rmb on May 12, 2021 18:14:47 GMT -5
Your son's other inheritance should not really influence your estate planning. IMO That would be like punishing him for it. I don't necessarily agree. I think jbug needs to be honest with both parties and tell them of her intentions and that it comes from a place of love. I think that it can be managed. Circumstances change with time (and money) so it doesn't have to be presented as a punishment - but more of an evening of things out. Definitely consult and discuss with professionals and all the parties who may inherit. If my daughter won the lottery and won 10 million bucks, I would worry a heck of a lot less about her inheritance and might give more of my money away, etc. Since she is 'taken care of' all she has to do is be smart and she has her own legacy. She doesn't need mine. We always say children shouldn't count on inheritances anyways, so the fact jbug's child already received one- he doesn't get to claim a second. It's up to Jbug and her concerns about her current spouse's standard of living are valid. Sounds like there's enough money to go around to me. I think the sticking point is the source of the inheritance. When jbug remarried she had a prenup in place to ensure her son inherited money that was left by his father. If there had been no money and everything jbug and her second husband accumulated was based solely on their own earnings then we wouldn't be having this discussion. I suppose one way to look at it would be to imagine that tomorrow she discovers that her husband is having an affair (God forbid) and promptly files for divorce. Would she want to tear up the prenup and view the "life insurance money" as marital property to be divided?
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gs11rmb
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Post by gs11rmb on May 12, 2021 18:17:48 GMT -5
This is a throw it out there and see how it sounds. Why set it up as "upon my death"? Why not give a fair allocation when each child becomes an adult? I am thinking give them some time to launch so ... 25? Because growing old and sick in this society is scary. I want to ensure that I have excellent care until the end. If that means less money for my heirs, quite frankly, I don't care!
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billisonboard
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Post by billisonboard on May 12, 2021 18:40:46 GMT -5
This is a throw it out there and see how it sounds. Why set it up as "upon my death"? Why not give a fair allocation when each child becomes an adult? I am thinking give them some time to launch so ... 25? Because growing old and sick in this society is scary. I want to ensure that I have excellent care until the end. If that means less money for my heirs, quite frankly, I don't care! Thank you for sharing that. It is certainly one perspective. One you can see from both sides. The other being, of course, "I hope the old fart dies quickly and doesn't use up all my inheritance."
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Deleted
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Post by Deleted on May 12, 2021 18:42:27 GMT -5
Your son's other inheritance should not really influence your estate planning. IMO That would be like punishing him for it. I don't necessarily agree. I think jbug needs to be honest with both parties and tell them of her intentions and that it comes from a place of love. I think that it can be managed. Circumstances change with time (and money) so it doesn't have to be presented as a punishment - but more of an evening of things out. Definitely consult and discuss with professionals and all the parties who may inherit. If my daughter won the lottery and won 10 million bucks, I would worry a heck of a lot less about her inheritance and might give more of my money away, etc. Since she is 'taken care of' all she has to do is be smart and she has her own legacy. She doesn't need mine. We always say children shouldn't count on inheritances anyways, so the fact jbug's child already received one- he doesn't get to claim a second. It's up to Jbug and her concerns about her current spouse's standard of living are valid. Sounds like there's enough money to go around to me. I respectfully disagree. If my child won the lottery and became a multi-millionaire, I might (would probably) change what I would leave him or her, but I’d still give them what their hypothetical deceased parent had left. I guess because in my mind, I’d be honoring what the deceased parent intended. I’m pretty sure a husband that died and left assets for his family probably didn’t intend to also provide for whoever I married later in life. Well, let me just speak for myself, that wouldn’t have been my intention if it was me. And if I was the child, I’d feel some type of way if my Mom gave that money to her spouse instead of me and my sibling(s). I’d feel like my Dad left that money for her and the children, that’s it. It wasn’t meant to provide for the next man or make his retirement easier. If she didn’t need to use whatever was left for herself after getting me launched, it should be passed to me and my siblings, not another man, imo. I apologize to the OP for stating it like that, because I’m not trying to be offensive. I’m just just sharing my opinion but I acknowledge it can come across as offensive to the OP. I have children that aren’t with my current partner. If there was money due to my children’s father dying years ago (there’s not, he’s still alive), I wouldn’t share it with Mister and I stopped giving a shit about my kids’ Dad many moons ago. Me and Mister need to figure out our own retirement, without considering money that was meant for my children or me as an individual. Or money meant for HIS children. I guess for me, it’s the principle moreso than whether my children actually need it or not.
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Deleted
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Post by Deleted on May 12, 2021 18:59:44 GMT -5
This is a throw it out there and see how it sounds. Why set it up as "upon my death"? Why not give a fair allocation when each child becomes an adult? I am thinking give them some time to launch so ... 25? When I first read this, I wasn’t sure if you were referring to a situation like the OP has or mine, where things are unequal. If my kids had an inheritance from their Dad, I would certainly be willing to give it to them once they were launched adults or maybe even when the were in the process of “launching”. Meaning if they were lazy good for nothings, not even trying to do anything with their lives, or worse, doing all the wrong things, I wouldn’t give it to them yet. But in my situation, I don’t have the means to make things “even” for my kids. If my son needs or even wants something I can help him do or get, I will. Gladly. But he doesn’t even tell me about things like that, so I have to do things for him on guesses that he might need or like it. And honestly, it would take more money than I have available to try to make things “even” or “fair” at this point. Although I’ve been on a saving spree for a while now, the sad truth is that right now, monetarily, I’m still worth more dead than I am alive. So that’s all I have right now to try to somewhat even things out between my children. Sad, but true.
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pulmonarymd
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Post by pulmonarymd on May 12, 2021 19:09:21 GMT -5
Because growing old and sick in this society is scary. I want to ensure that I have excellent care until the end. If that means less money for my heirs, quite frankly, I don't care! Thank you for sharing that. It is certainly one perspective. One you can see from both sides. The other being, of course, "I hope the old fart dies quickly and doesn't use up all my inheritance." Based on my experience and profession, I think that having assists to tap is a great insurance. Most of us who get old will have to pay for care. If you give it away before the time comes, your options rapidly diminish. Not to mention the 7 year look back that exists, so if you give the assists away and get sick and need care in the next seven years, you have potentially hurt yourself. I think finding a way to fairly divide assists makes the most sense. The million dollar question is what is fair. I agree with the need for expert advice and negotiation
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laterbloomer
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Post by laterbloomer on May 12, 2021 19:23:47 GMT -5
Your son's other inheritance should not really influence your estate planning. IMO That would be like punishing him for it. I don't necessarily agree. I think jbug needs to be honest with both parties and tell them of her intentions and that it comes from a place of love. I think that it can be managed. Circumstances change with time (and money) so it doesn't have to be presented as a punishment - but more of an evening of things out. Definitely consult and discuss with professionals and all the parties who may inherit. If my daughter won the lottery and won 10 million bucks, I would worry a heck of a lot less about her inheritance and might give more of my money away, etc. Since she is 'taken care of' all she has to do is be smart and she has her own legacy. She doesn't need mine. We always say children shouldn't count on inheritances anyways, so the fact jbug's child already received one- he doesn't get to claim a second. It's up to Jbug and her concerns about her current spouse's standard of living are valid. Sounds like there's enough money to go around to me. But would you give away the money left to her by her father? In my mind, to give the son's inheritance to the new husband is to ask the son to subsidize his retirement. It's one thing if the son decides to do that, another to have the choice made for him.
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billisonboard
Community Leader
Joined: Dec 20, 2010 22:45:44 GMT -5
Posts: 37,386
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Post by billisonboard on May 12, 2021 19:34:33 GMT -5
This is a throw it out there and see how it sounds. Why set it up as "upon my death"? Why not give a fair allocation when each child becomes an adult? I am thinking give them some time to launch so ... 25? When I first read this, I wasn’t sure if you were referring to a situation like the OP has or mine, where things are unequal. If my kids had an inheritance from their Dad, I would certainly be willing to give it to them once they were launched adults or maybe even when the were in the process of “launching”. Meaning if they were lazy good for nothings, not even trying to do anything with their lives, or worse, doing all the wrong things, I wouldn’t give it to them yet. But in my situation, I don’t have the means to make things “even” for my kids. If my son needs or even wants something I can help him do or get, I will. Gladly. But he doesn’t even tell me about things like that, so I have to do things for him on guesses that he might need or like it. And honestly, it would take more money than I have available to try to make things “even” or “fair” at this point. Although I’ve been on a saving spree for a while now, the sad truth is that right now, monetarily, I’m still worth more dead than I am alive. So that’s all I have right now to try to somewhat even things out between my children. Sad, but true. It was meant to be more "generic". If the plan was from the start that insurance money would be used to support the widow(er) and children and then remaining amounts allocated at launch it would help preclude issues. It just more complicated the more that happens in lives. And so much on timing of the allocation. I can hear myself, "That is the plan now but I will still be the parent making decisions."
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