<p>Thanks, LongPrime. Hopefully, S will learn enough about investing so he can help us manage our money and be OUR financial advisor. Maybe when I can cut back to part-time at my non-profit & after H retires, we will have more energy to devote to investing & making better financial choices. There are some financial advisors at Charles Schwab, but not sure what I think of them.</p>
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<p>I’d say get an attorney who specializes in trusts and set up a trust that better reflects how you want the money distributed to the trust recipient. There are various types of trusts where one can specify how money is distributed to the recipient. If there’s a significant amount of money, it seems to me that one might not want to be surprised (like the folks in the earlier post) about the terms of a trust distribution.</p>
<p>Yes, I would say that a decent attorney should write the trust so that it has the terms that the person setting up the trust (grantor) intends. They should try to brainstorm all the potential scenarios and figure out what they would want so that it is NOT a surprise that could backfire badly. As was pointed out, this is especially when there is a significant amount of money involved.</p>
<p>Agreed. Get a good wills and trusts attorney. My S and D are beneficiaries of a generation skipping trust from my Dad who has passed away a decade ago. It’s written so that they can’t have access to any money until I die or when I feel generous.</p>
<p>Yes, it’s very awkward if young people get a very large sum of money when they don’t have the skills to handle it. When the trust is written, most people would NOT know how well or poorly the beneficiary would be able to handle a large amount of money perhaps decades or longer in the future. It’s good if a responsible person, such as a parent or other trusted person is appointed to provide appropriate access to assets.</p>
<p>It is interesting to see the different opinions on this thread. As far as I recall most states UGM Acts provide that the funds belong to the person at age 21. So, there is some general societal perception at least in the legislatures that 21 is a point in time after which a young adult ought to be responsible enough. </p>
<p>I recall early in my practice being court appointed as an ad litem on two occasions for two different minors (one an infant [less than a year old] and another a toddler) to review a proposed settlement of a personal injury claim for one and a wrongful death action for the death of the father of the other. In both instances the settlement amounts were very substantial and to maximize the recovery I required that the settlement proceeds be used to set up an annuity for the minor. In both cases, the court expressly indicated (in chambers) that he would not approve a settlement that did not provide for a payout of all the money by the childs 21st birthday. Both judges said that the collective we could not play God and that having a partial payout at 18, 19 and 20 with the balance at 21 to encourage use for college was all the engineering I could do. The interest rate used to calculate the return was over 10%. For the infant, the ultimate payout 20 years later was North of $30 million. I think that the judicial attitude is that at 21, you had better have your act together.</p>
<p>It is pretty obvious that many upper -middle class and higher folks have a greater desire to protect their children (or control the money and the child) well beyond 21.</p>
<p>I also have seen trust fund babies up close and personal. The dribble out approach can produce some pretty worthless folks. I think that there cannot be a generalization that fits every time. I was involved tangentially where both parents died in the same car accident (in their early 40s) and all the assets flowed to the children (sister and brother) who were 19 and 20 at the time. </p>
<p>No trusts. Nada. Major assets. Numerous apartment complexes. The male wanted to run the properties. He and the sister did a buyout wherein he acquired her interest for cash. He is still a major player 30 years later. She took the cash, moved to the Carribean, got the required sailing training /licenses, bought an ocean-going catamaran (she and a crew sailed it back from the Mediterranean) and spent the next 9 years using the boat as a rental business with her as the captain. At 28, she sold the boat, came back to the states, went through law school and moved back to the Carribean to practice maritime law using the contacts she had made over the years. Happy, self sufficient and (very) wealthy. </p>
<p>I cannot imagine that either one of them would have had these sucesses if someone had been “protecting” them until they were 35.</p>
<p>^^^
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<p>Thank you for those excellent examples 07DAD, exactly the information I was hoping to hear regarding distribution of trust assets. I recall the maxim “Give me a child until he is seven and I will give you the man” as a guide to placing confidence in our kid’s decisions after we are gone.</p>
<p>So much depends on circumstances. In cases I was involved in where there was catastrophic injury (paralysis or similar), our court DID approve spendthrift trust which would protect funds from creditors and allow guaranteed payments over the lifetime of the patient/client. Several of these clients went on to marry and live fulfilling lives. The settlements were to insure that their medical and other expenses would be paid throughout their lives.</p>
<p>Millions is a lot to give a young person at age 21 or younger. Glad it worked it well for that brother & sister. Don’t know many trust fund folks closely.</p>
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<p>Are you saying that if they didn’t have the money in a lump sum they wouldn’t have been successful? Seems to me that the money may have helped them along, but you described two individuals who were self-driven and motivated to succeed in fields that interested them. They probably would have succeeded and been successful no matter how they received the trust assets.</p>
<p>Suspect that 19 & 20 year old B & S would have done OK for themselves, even without any trust fund. They could just as easily squandered all their trust fund dollars as many who win lotteries do & end up penniless.</p>
<p>jym626,</p>
<p>I seem to be having the opposite problem you have. My D will be 23 next week, graduated from college in May, employed fuul time now, but planning to go to grad school this fall.</p>
<p>With both our kids, we had the money talk, they knew what we could/would do, and both knew that if there was any money left at graduation it was theirs. Both decided to go to schools they could graduate from debt free. S took his leftover $ and moved to Europe. He has been very successful, now there 8 years.</p>
<p>D,though, doesn’t want us to de-link her acct. at all. She lives within her means, but I really just don’t want the responsibility. </p>
<p>Anyone here have suggestions?</p>
<p>Re Trust funds:</p>
<p>I’m tweaking this just a bit to protect privacy, but in essence, a family member put his considerable monies into a trust to be divided among his 7 children. The money each child received was based on what that child had already spent on colleges. The trust money could be used for educational purposes only until each kid turned 45, after which the remaining money would be turned over in full. At the time of his death, some of his kids were finished with college and advanced degrees, while some had barely started. The kids with access to the trust money for college blew through their entire part of the trust. They attended very expensive private colleges. The older kids, who had gone to cheaper state schools, had used scholarships extensively, and had asked their father to pay almost nothing for their college educations, were unable to access any of their part of the trust. The money was invested and managed well through the years. In the end, those without access to the trust until age 45 ended up with a huge inheritance. Those who used most of the money for undergraduate and graduate degrees, have gotten very little as they’ve turned 45. </p>
<p>It has been interesting to see this play out through the last couple of decades. Some of the siblings wish they had been wiser with their trust funds when they were younger.</p>
<p>gloworm- I have a suggestion- lets trade kids!</p>
<p>07dad
I have heard countless other stories (icluding the ones in my family) where money was seriously mismanages and frittered away. The success stories are rarer. </p>
<p>Of course too, we arent talking the kind of $$$$$$$$$$$$$$$$ that your trust fund babies had. Thats a nice neighborhood!</p>
<p>I wonder, EastCC, did these children all have the same mother? One parent can have a huge influence on the values of the children. I can see laddering the payout until the beneficiary reaches 25, but 45 seems ancient. Trust managers charge a hefty premium for administrating high value accounts, tens of thousands a year just to act as gatekeeper. Of course if there is reason to believe the kid(s) are irresponsible or associate with unsavory characters then it makes sense to mete out the money over a longer period. But I think most mature, educated 25 year olds can step up to the plate and take responsibility for an inheritance.</p>
<p>07Dad, #106.
So what would do if you were again appointed financial guardian, in today’s or looking back 10 years financial environment? A ROR of 12% surely would be overly optimistic.
Buy Gold, a House, Condo in LasVegas, MF?</p>
<p>Planestate, the actual terms were more draconian than the version written here, but for privacy’s sake I’m not going to write them on an open Internet forum. The trusts were decently, though conservatively, managed for those who couldn’t touch them. It was a legal, though certainly strange, document. The motivation of the person who wrote it appeared to be more spiteful than thoughtful, but it was his money, to disseminate as he saw fit at the time. His children were not aware of the trust set up until after his death, so his thought process can only be guessed.</p>
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<p>Isn’t that the bottom line?</p>
<p>Longprime- Whats MF? (assuming we arent talking about the curseword expression 
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<p>its not, else I get banned, which I should-you guys are not helping in my search. </p>
<p>MF=mutual funds. Non a curse word but ad homin. In 2008-09, the reference was MF MF. :)</p>
<p>MF=Mutual Funds, I’m guessing. We gave our son all of his spending money for college up front. Books, allowance, whatever funds in one lump sum. He is a sophomore and hasn’t spent a dime of that money. He lives off his summer and winter break earnings. I figured it was a relatively inexpensive way to see how he would handle money. He has always been responsible. We pay his tuition, car insurance, car payments during the school year, he pays the car payments in the summer. We have trusts set up for tax reasons, if H and I die before he is a certain age there is a trustee in place and he will recieve 3 lump sum payments over time. His trustee is someone we trust who knows him well and can advance money ahead of schedule at his discretion. I wouldn’t give my son several million dollars right now but I think he is financially responsible.</p>