My spouse used to make comments that we had a suspicious amount of insurance on him. Every time we upped it he’d make jokes about it. We still have probably too much life insurance relative to our needs. But have let various policies lapse over the years as needed, for example the policy on me that would have covered childcare.
I like the idea of the complex trusts mentioned by @shawbridge and others but I’d use an attorney versed in these things together with our FA. We’re still a little bit away from this type of planning.
Our goals have been meet retirement needs and pay for college so kids have no debt. Haven’t planned the next phase.
I’m not sure I ever want to fund a trust for the kids except something that’s payable at death. I’ve gotten a lot out of working and building a life. Not a judgement on anyone else’s choices. But I want my kids to live their life on their terms including managing their OWN money. I don’t want them to have a trust when they are under 50. I’d prefer to fund an educational trust for grandkids. I’ve seen too many people under 40 make choices based on what their parents can provide. I know it makes sense for some but just our thoughts as self made people. YMMV. .
I’m always worrying about too much money from inheritance and they’ll be like Steve Bing and not Bill Gates. Steve Bing inherited $800 million at age 18.
Well, I have more faith that I invest in the next Google/Amazon than winning the lottery. But we do buy tickets if it’s more than 500 million. Never know.
Would be hard to give all that money to good charities.
I have Fidelity managing a small part of our portfolio so I can use their estate planning services in their private
wealth management. This is in coordination with my own estate planning attorney. I have been happy with them.
Maybe my Mom has a different type of service. I had asked the advisor for no international, and add Vanguard total market, and he said they didn’t do it that way, it was a formula entirely based upon her risk profile.
Reading Bing’s biography on Wikipedia, he was talented but obviously jaded. Then giving so much money to Democratic causes and denying any contact or connection with his own biological children.
" Bing died by suicide on June 22, 2020, at the age of 55 by jumping from his condominium on the 27th floor of the building at 10000 Santa Monica Boulevard in LA. At the time of his death, he was worth $300,000, having spent most of the $600 million he had inherited."
Thanks @BunsenBurner. It has been a while. I used a very good attorney when I set up the ILIT and Crummey Trust and would recommend doing so. My memory is hazy because I no longer use it.
@Htas, the trust we established directs the trustee to deal with the health, welfare, education, housing needs of the beneficiaries, which include ShawWife and me. The trust could help the kids with a downpayment on a house, but we don’t have enough money for either kid not to work. It is not intended to (and couldn’t) eliminate their need to work. We are fortunate that our kids have launched so well. It is plausible that ShawSon will never need help, probably even with a downpayment. ShawD has a great career but depending upon her choice of partner, could need some help with a downpayment, for example. The trust itself is designed to help subsequent generations, though I doubt there is enough in it yet to do that.
In addition to the trust, we are also repurposing the 529 plans we set up for the kids to fund grandkids education. We don’t have any grandkids yet, but tomorrow is ShawSon’s wedding. I expect to fund 529 plans within 10 years. This seems like a great estate planning tool.
That’s a special day and milestone. Have a great time. Seems like 529’s can also be a good vehicle for saving for the grandkids. We are miles away from that, but I like reading about how various people set things up as I wouldn’t have known about a dynasty trust.
I’m starting to learn about trusts, it’s very complex.
We had set up a stock account (was very easy) with a very good energy company for DDs with me as custodian. Normally I would not go with a ‘single stock’ but we are also not talking about a great deal of money, always had dividends and stock has done well. They keep very up on varying energy sources and are ‘in tune’ with their customer base. The funds DDs drew was not a tax issue with their tax returns nor with ours. Now that energy company uses Computershare, which is a little more difficult because it seems I cannot put money directly into the account they have for our grandkids (DD is custodian), so DD has to consolidate the account once I put the money in (I can put money in with all the info and it goes in as a new account with that child’s name and DD as custodian, SS numbers and all). That is easier than having the money into her personal account and having her put the funds in (she has limited time). She may not even have consolidated - it all shows up under the grandchildren’s names for her electronically.
The problem with 529 is if a child doesn’t go onto college, or do enough college to use the funds - and then you need to pass it on to another. I never felt compelled to ‘learn’ all the 529 rules nor look at ‘best’ 529 plans and investment choices.
Actually, I found there were lots of problems including: the funds took 5% when money was put in, the funds were very limited and one had to buy funds they could not buy stocks.
The 529s had lots of limitations on college spending. The most obvious is what happens if you’re kid wins a gigantic scholarship and you now have 300K in a 529? Or even 100K left over. Yes, I know it can be used for education in the future but what if you want to spend your $, your way? You are out of luck.
I have a friend who works for a T20 college. She saved the entire amount, 275K for college. Her kid is attending with free tuition. They pay for room and board only.
There’s one child so the money can’t be spent down and the kid intends to complete college and be done. So how will this family access the $. I think she said all of the profits will be taxed. She wishes she had saved more for retirement and less in a rigid vehicle. YMMV.
On the other hand, I think 529’s work well for some people. I just despise high fees and low returns.
My understanding is that you can withdraw amounts equal to the scholarship from the 529, and pay only taxes on the earnings, and no penalty.
Other withdrawals for non-qualified expenses incur taxes and a 10% penalty on just the earnings, but years of tax free compounding may still let you come out ahead.
In any event, it’s not like you can’t get the money at all, it’s not locked up forever.
I am happy to be able to withdraw from my son’s 529 account and access the tax free earnings to pay for college. There has been a lot of growth over his childhood. The funds were more limited when I started it when he was a baby but over time they have added more and better options. If he ends up not using it all I’ll have no problem pulling it out and or saving it for grandchildren.
How much umbrella insurance do you have? My agent discourages getting anything beyond 2M. I was sure why. How do you decide how much coverage you need?