Setting up a Trust

Discussion in 'Taxes and Accounting' started by FCXoptions, Sep 4, 2015.

  1. Hey guys,

    So my brother-in-law is mentally challenged, he just became an adult and receives a small amount of money from social security every month. His parents are pretty much just saving the money he gets, so that when they get older he will have a decent amount set aside to help cover his expenses and whatnot for after they can no longer care for him. He will presumably live with my wife and I when that time comes, just in a guest house or something as he can basically take care of himself and will want to still be relatively independent.

    His parents are going to meet with an advisor at some point in a few months to kind of figure out their best plan of action, but in the mean time they have asked me if I can give them any advice on what I think will be their best plan of action. I told them I would do some research and get back to them as I am honestly not really that familiar with trusts, just the basics pretty much.

    SO, with that being said, do any of you all have any advice on what the best way to go about this would be? His mom told me they basically just want to set it up so they won't have any tax concerns for it after they pass away (they also have money set aside of their own for him) and they would like to invest it in something relatively safe so he can make a little bit of a return on it. I would like to kind of give them an idea of what to expect when they meet with the advisor and some guidance so they will know what they do and don't want.

    Any help would be greatly appreciated!

  2. And on second thought, since the money is his from SS, for those funds would he even need to set it up in this way? It only is like $6k/yr right now, but I'm sure that will increase as he becomes a bit more independent and they start reporting it as such. Not sure how all the calculations work for that.
  3. destriero


    A FA is a waste of time. They will want to put existing assets in some bullshit fund with a massive load. There should be little to no equity exposure in such a trust.

    Any competent trust attorney can set this up for a few thousand. Don't use the attorney as administrator as the fees will kill it. Term life insurance must be a priority. Best to use multiple underwriters. You can worry about allocation once one of the policies pays-out.

    I have a wealthy relative who has matched his current assets with term policies from MetLife and Chubb, IIRC. Chubb (Chubb Sig. Suite) handles travel/offshore risk as he has homes in PV, Antigua and MC. There are a few mil in zeroes and the two term policies (his wife's and his policy).

    I wouldn't be as concerned with accruing capital as I would be with maximizing the insurance coverage.
    Last edited: Sep 4, 2015
    FCXoptions likes this.
  4. Yeah, that is why I was wanting to kind of get some feedback on here, because I figured with them not knowing much at all finance wise, an advisor would probably screw them over big time.

    But so you're saying to put his funds towards the insurance policy premiums so when one of them passes away that will all pay into the trust?

    Thinking of the lawyers, I have a group legal deal through my job, I can probably call them up and talk it over with an attorney to get some input on that route as well.
  5. destriero


  6. loyek590


    lawyers good, financial planners bad, avoid them like the plauge

    something to keep in mind, my elderly parents lived comfortably for 20 years on 3k/mo. Now I have them both in the old folks home at 15k/mo. Hiring somebody to take care of somebody can get incredibly expensive.

    whether you like it or not, you are now the financial advisor
    FCXoptions likes this.
  7. Haha no doubt, I let her know that the attorney was the way to go for sure. She got a quote of $750 just now to do a will, trust, and a power of attorney from a local guy.

    I work for an global insurance broker doing pretty much strictly corporate deals but I have made several connections to personal lines guys that I can reach out to for them to try and get some quotes on the insurance polices. Destriero, I think that is probably a smart decision also on spreading it across a couple places instead of just one. I use Northwestern Mutual for mine and my wife's stuff. And then one other company for a policy my grandparents set up for me as a kid, can't remember who it is through.

    His parents don't have life or disability insurance either, so hopefully I can help get them in good shape.

    This is definitely true. Of course when he gets old I'm sure it will be a different story, but as of right now apart from having somebody cook him chicken nuggets for dinner, he can pretty much do everything himself. They work with him pretty regularly on life skills and whatnot. He really isn't bad off at all compared to many people. If/when he moves in with us, many years from now, the plan will be for us to have a guest house for him to live in so we can still be right there, but that he can still be relatively independent for as long as possible. Based on his mom's genes though, she will probably outlive the whole family lol.
  8. loyek590


    laugh if you want, but I have gotten some good term life quotes from selectquote. At least check them out first before you buy.

    and no, you will need 24 hour care sooner than you imagine. I would totally give up the idea of him living out back. Sounds nice now, but years change things. Hard enough to take care of healthy parents, but to take care of a special needs is fulltime. You are going to need help. Start taking care of everything now, if you wait you will get a whole lot of shit dumped on you that others set up and you don't understand.
  9. Yeah, I definitely will take a look at it.

    The living out back plan is just what the in-laws and my wife have pretty much always said. But you are probably right. I will look into all that as well and see what we can make work. I am hoping to help them get everything taken care of so we won't have any major issues. They don't know much on any of this, so hopefully can get them in the right direction so when the responsibility does come on my wife and I we will be in good shape to handle it all.
  10. balda


    They need to set up Special Needs Trust
    #10     Sep 9, 2015
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