<p>Congrats PackMom! Isn’t it funny that I “retired” (didn’t realize it at the time) at age 55 to the same location that you left when you retired. (Birkdale) </p>
<p>I basically agree with busdriver/hayden about the dangers of an estate plan that allocates today to those who are doing less well even though the final date (death) will come much later (hopefully). First, those who appear to be doing well now may experience real setbacks after the allocation is made and those who aren’t doing well may start to do well. We’ve seen that in my wife’s family. </p>
<p>Second, it sets bad incentives. One of ShawWife’s siblings and her H went to an Ivy and a top 20 school but moved in very new-agey directions and explicitly chose not to make very much money or work very hard due to their spiritual quests but in part because they implicitly thought that the Banks of Daddy and Mommy would take care of them. At one point, the MIL asked me what I thought about a policy of dividing the estate based upon who needed it, particularly with reference to this couple. I said that it didn’t seem fair to penalize those who chose to work extra hard to ensure their financial independence. I pointed out that in contrast to this couple (whom MIL praised for their wonderful family life), I had made sure that there was always sufficient income to cover expenses and save but that meant many nights on the road, which wasn’t easy on my wife (especially when the kids were young). I asked if it was reasonable to reward the folks who chose not to work that hard (and pursue questionable businesses like trading crystals with spiritual value) in order to be with their families in favor of those who chose to do work hard and create a financial structure for the family. A few years ago, the MIL made it clear that no one should be relying on her assets to manage their lives and the new-agey wife of the couple decided to build a real business (somehow, crystal-trading isn’t cutting it) and has been doing so. It has been harder on their family lives as she’s really working now. </p>
<p>So, I think a policy of predicting today who is going to be doing badly and letting people know that you will help the less well-to-do has potentially poor consequences. Nonetheless, it would be helpful to be able to respond to real need down the road (e.g., when it happens as opposed to predicting far into the future). A trust like the one we set up can mitigate some of that by instructing the trustee to help first with health and welfare, then housing, then education. So, if someone were really in need, they would get the support. If someone had a disability, the trust would provide the funds. But, it is not supposed to set up a situation in which people sit back without seriously working and wait for the $$ to flow in. It will invest in sensible business ventures of the beneficiaries (and already has). If we’ve done it well, it will help education for at least the next generation and hopefully more and with things like downpayments for houses. But, the objective is to help teach the person to fish rather than give them fish. </p>
<p>Agree with the above post–the future is very tough to predict. Originally, I would have guessed that relatives with professional degrees would have a MUCH more secure financial future than someone with a govt job, but in real life, it isn’t turning out to be quite that way, at least in the circle I live in. Glad the “new age” couple is becoming more grounded and deciding to start earning their money like everyone else instead of counting other people’s money.</p>
<p><a href=“https://www.fidelity.com/viewpoints/retirement/8X-retirement-savings”>https://www.fidelity.com/viewpoints/retirement/8X-retirement-savings</a></p>
<p><a href=“How Much You Should Have Saved in Your Retirement Account, by Age”>http://lifehacker.com/how-much-you-should-have-saved-in-your-retirement-accou-1663712527</a></p>
<p>another way to estimated what do you need for retirement – 8X of your latest salary</p>
<p>@Dad II, OH NO, my wife got a raise, so I guess we no longer have enough to retire. Any retirement analysis driven by income, rather than spending needs, is IMO bass-ackward. </p>
<p>The 8x guideline is a good way to start the thought process. There are people that hope to live off SS, without significant savings. </p>
<p>Reminder - Traditional 401K money gets taxed. So only include about 70-80% for your analysis. </p>
<p>Ixnay, yes we live below our means and that would make sense. </p>
<p>Will you factor in how much you have already spent on kids when determining the split? eg D1 went 4 years to a private college at full pay, and now four more in med school for even more, whereas S finished in 3-1/2 and has been independent. Should we factor this in to what we leave them? As things stand, we haven’t…
I’m more concerned on what I’ve been delinquent in thus far - 1) documenting all our accounts and making sure my survivors are aware of everything, 2) minimizing the time, expense, complications, and the public nature of probate, and 3) educating them on the steps to take, such withdrawing our 401k over their lifespan, rather than in one go, etc. I have to discuss with our lawyer on how to set up the living trust and who’ll administer it if both DW &I make a simul exit.</p>
<p>Would someone be willing to explain these trusts you have set up to me? We are going to revise our wills…ame would like to do something sensible. You can PM me if easier.</p>
<p>It makes more sense to have a free or low cost initial consultation with an estate attorney and ask him or her what they would recommend for your situation than trying to get advice from folks whose situation may be significantly different from yours. A good attorney will take into account the client’s preferences, the state and federal current estate and gift tax situation, and any special circumstances. They should be able to provide you for a price estimate for the total job as well–getting all the documents written, signed and filed. </p>
<p>A good estate attorney can also advise what has been successful and less so in different scenarios, caveats about what has been troublesome, and more. If you have significant assets, it really is worthwhile hiring someone to go over this with you and be sure that assets will be handled as you intend. To me, this is NOT a place to economize and leave your survivors with heartache and a big hunk of money going to the government that could have gone to your loved ones.</p>
<p>@Dad<em>of</em>3, agree that it can be tough figuring out how to be “equal and fair” when you have spent substantially different amounts on each kid. So far, we plan to leave everything equally to both kids, even tho we are supporting D a lot longer than S. We paid for 3 semesters of CC and then 4.5 years of college and have paid for all her expenses since then because she hasn’t yet gotten a job, tho she got her degree 1.5 years ago. S has been working for 3.5 years already and hasn’t wanted or received any money from us since then. He even bought D’s plane ticket to come home this year and hasn’t yet asked for reimbursement. ;)</p>
<p>@thumper - everything I know about trusts is from books like Nolo “Make your own living trust” and Nolo’s simple will book by Denis Clifford which I got at our library to get some basics before I see our attorney in the next couple of weeks. Same as the site Colorado mom had a link to a few posts earlier - <a href=“http://www.nolo.com”>www.nolo.com</a> </p>
<p>Basically a lot of assets outside of IRAs, 401(k), and life insurances, such as your home and non-retirement bank and mutual fund will have to go through probate before being distributed to the beneficiaries, and this could be a long and expensive process. The theory is if it’s in a living trust, you maintain control of it as long as you’re alive, and when you and your spouse sign out, the process of getting the assets to your kids is, in theory, faster, private, and less expensive since it avoids probate. There are other nuances like A-B trusts with additional benefits but they don’t apply to us since we’re not in that high an asset bracket. For me the the main benefit would be how simple and quick it would be and if the charge isn’t too high, I’d be interested.</p>
<p>For us, SisIL lived in CA. If she hadn’t executed numerous legal docs (naming beneficiaries, establishing trust, etc. literally in the last weekend of her life, her heirs would have had to pay > $100k in probate fees, likely much more and it would have taken much longer and would have had other additional expenses. </p>
<p>Yes, have read that bolo is a good resource–often available at the library. We consulted at no charge with several attorneys before we decided what to do for our personal situation. </p>
<p>“Should we factor this in to what we leave them?” - In our case… the net is the kids would split whatever is left when we both are gone, (It wont’t be as much if we live a long time - so be it). </p>
<p>“It wont’t be as much if we live a long time - so be it.”</p>
<p>In our case, it will be nothing. Our goal in our retirement (unfortunately it will be soon) is not to become our child’s burden any time soon. If we could achieve this, we will be very happy.</p>
<p>Financially speaking, our family was the richest when our child entered the college. (That is the reason why we got a big, fat zero in financial aide from every college DS was accepted. We were “income not much but higher assets” family as seen by the college.) We were going downhill from that year. Hey…I think we have just paid our very last bill for the tuitions (after 8 years!)</p>
<p>If things are really unequal, we might try to equalize but it would have to be really unequal. And we would do that while we were alive. We want to take care of education for grandkids and health and some assistance with housing for kids and maybe the next generation. Plus assisting them if they want to start businesses (if they are good ideas). </p>
<p>I would think it depends on how much there is to distribute. If there’s enough that equal distribution would give everyone enough for cover the basics, that’s easier to do than if a limited sum would really help one but doesn’t mean much to another. We have an only child and this is one thing we don’t have to worry. Our parents made an equal distribution to a “starving” artist and a successful surgeon.</p>
<p>I agree @Iglooo. If there is only a small amount, then giving that little bit to the place where it would make a difference might make sense. But, I would want to a make sure that this is discussed in advance and that the relative difference in economic status that was projected at the time is actually the same when the distribution gets made.</p>
<p>One other thing I’ve observed. As the parents generation lives longer and longer, gifts they could have made to the children that would have made a big difference to the children’s lives come so late in the children’s lives that they no longer have the effect. E.g., although this is a first world problem because we have been fortunate in life, so bear with me here. We have worked very hard on saving for college and retirement and chose not to buy a vacation house, but would have wanted one. Had we gotten a meaningful gift ($250K?) from my in-laws 20 or 25 years ago when things were tighter, we might have bought one and that might have changed our quality of life. [I honestly don’t have a lot of complaints in life and this isn’t one, but my wife and her sibs all got married at my inlaws’ country homes – our kids don’t have the equivalent place). If we were to receive the same distribution now (or 10 years from now), it probably wouldn’t change our current plans as much. Not clear, for example, that we rush to buy a vacation home at this point.</p>
<p>I’m hoping that if all goes well, there will be a large enough sum to distribute and will try to do most of that by keeping things in the family trust.</p>
<p>We do know a few families where the grandparents have a comfortable retirement situation, and they share the good fortune by splurging on vacations that include kids/grandkids. Some are modest. Some are more grand. (One coworker and his 3 brothers and all the wives were treated to2 week splashy vacations all together- example cruise in Greece.) All sound like a nice way to enjoy the money along with the heirs. </p>
<p>Although we are not planning “nice” family vacations for the next couple of years, because this last summer our vacation got in the way of better summer jobs, that is an area we will likely continue to spring for the kids, as long as we can afford it. We don’t spend a lot on house stuff, our cars are fairly old, but we do like to take nice family vacations. </p>
<p>^ We have been planning to have a short but hopefully not costly (i.e., in-state, 2-3 days) vacation with our grown-up S during the Christmas holiday.</p>
<p>He will most likely have very few days off every year for the next, say, 4-5 years and will likely have even less opportunity to be alone with us (because other things important to him may need his attention in the near future.) So we should value the time we will be together this coming holiday.</p>