How should my father set up his inheritance?
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How should my father set up his inheritance?
My father is 75. I am his only son and my wife and I have an 18 year old and a 16 year old. My wife and I earn good incomes and have never had an issue with regards to handling finances. I don’t know how much my father will have at the time of his death but we are guessing that it’s a sizable amount. His plan is to divide his money by giving my wife and I 30 and giving each grandchild 30 with his brother acting as the executor. He says he wants to set aside money for the kids so that they will have money for a house down payment, to help their own kids, etc. Is that appropriate? What if my kids are not responsible when they portion is given to them? And will his brother decide the threshold upon which they receive those funds? My father trusts me but I don’t think his plan is responsible.
Asked on February 13, 2017 under Estate Planning, California
Answers:
SJZ, Member, New York Bar / FreeAdvice Contributing Attorney
Answered 7 years ago | Contributor
The money for the children can be put into a "testamentary trust": a trust created by the will, which comes into being when your father passes away. There will be a trustee (which could be your brother, if your father does not want it to be you), and the trust can lay down rules, instructions, and time frames which the trustee must follow. For example:
Until they graduate college, the money could be used be education and medical expenses only;
On graduation, they get maybe 1/4 the remaining money set aside for them;
Every following year, they get another 5-10% of the remaining money.
There are many ways to structure it, but the point is, a trust allows control and keeps still-immature young adults from having access to too-much money at once. Any attorney who does wills can create a trust like this to your father's specifications.
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