vested will over time, does it even exist?

Discussion in 'Risk Management' started by ggelitetrader000, Oct 9, 2024.

  1. Sorry if it seems off-topic but this is bit fit i can as I am trying to do a risk management for the will i have for my child.
    - few years back, i went traditional option, went to law firm to draft and finalize the will, But its function is very basic in terms of versatility but very complicated with full of jargons. I asked for my child to divide my will over time to 3 chunks to be distributed when she reaches age 20, 25, 40 but they said no such mechanism exist. They drafted something similar. I am wonderin what i can do to achieve something like this. Because leaving lump sum all at once is risky.

    So I was hoping to find distribution mechanism that works similarly to RSU (restricted stock options) that companies award employees. For my case, for example, i get awarded with sum but i can not use rightaway but dsitribited evenly over 5 years period.
     
  2. mervyn

    mervyn

    grantor trust
     
  3. BMK

    BMK

    What mervyn is referring to is usually called a revocable living trust in the US, and that is one way to do what you are talking about.

    That's ridiculous. That's exactly the kind of thing that a trust can accomplish. Either they did not understand your question, or you are dealing with an incompetent lawyer. And in the US, that kind of trust can be written into the will. It's called a testamentary trust.

    What country are you in? Your post suggests that English is not your first language.

    I don't think it matters. Trusts exist in virtually every legal system, everywhere in the world. Except maybe... I dunno, North Korea?

    Some jurisdictions have limits on the degree of control you can exercise from beyond the grave. So, for example, some states in the US or some countries might have a law that says that your child can get all the money when they reach age 35, even if the terms of the trust are more restrictive.

    Many jurisdictions make it impossible for you to completely disinherit your spouse. A trust is not a will, but you may not be able to use a trust to work around that type of law.

    But if your lawyer didn't take the time to explain how a trust works, something's wrong.
     
    Real Money likes this.
  4. Bad_Badness

    Bad_Badness

    I did what you described. 3 portions 5 years apart. Nothing before 35 yo except living expense. Untouched portions stayed in the trust.

    Couple of things I would recommend:
    1) put a 1 year moratorium on most of it. That way all the vultures will leave them alone and forget about it. They have a good reply. Sorry it is locked up.
    2) have the assets deployed and not in cash or easy liquidated. The idea is if they did not earn it, they certainly will not know how to manage it.
    3) give them a small portion to "go crazy with" but keep 90% for decades but useable such as primary residence.
    4) consider they only get some multiple of their net worth every 3-5 years. Give them some incentive and appreciation.

    I know several cases where sub 35 yo got money and it literally ruined them. One tried to make a movie, lost it all then tried to commit suicide (old Utah mining money). Another lost 100k's on crazy investments trying to make millions (triple mortgaged the family home and the benefactor went bankrupt). Lost it all, has an eating disorder, divorced, estranged kids.

    There is NOTHING wrong about earning money. In fact it is much better than getting it, imo.

    Lastly, all those that say, "if I had a million dollars, I would...." are to be feared. My reply when someone asked me that was, without hesitate or thinking: "make two".

    Get an estate lawyer someone who knows your states laws. Also you have to update every 60 months or so. Expect to pay 2-3K for a complete set of living trust, living will, Durable power of attorney, and medical power of attorney.
    Best of luck.
     
  5. Very nice advice, you and others.
    1) how would moratorium work in this case? Still trying to make sense.
    Totally agree, last thing i wanted is someone much less my child squander the wealth that I broke tooth and nails to earn it. On the other hand, i dont wanna leave nothing. So, somewhere in between.
     
  6. good point, looking into trust now, never considered. I am not sure the law firm mentioned it to me about trist specifically, but if they did, they did it so subtly i did not get it. They instead produced ~100 pages of docs that "estate plan" but I do see "revocable trust agreement".
     
  7. BMK

    BMK

    He's using the word moratorium in a loose, nontechnical sense.

    He is suggesting that you put terms in the trust that say that the beneficiaries get nothing for the first year after your death, except maybe the right to live in, but not the right to sell, the family home, or maybe enough money for reasonable rent, groceries, and other basic living expenses. If they can't get to the money, they won't make mistakes, and when "vultures" find out that they can't get to the money, they will leave them alone.

    Is that a typo? Did you mean to say "I do not see 'revocable trust agreement'"?

    Broadly speaking, there are two types of trusts: a living trust and a testamentary trust. A living trust is created while you are alive; a testamentary trust is created after you die, by operation of the will. The trust is embedded in the will, but it does not come into existence until you die.

    A living trust is more complicated and expensive now, but smoother and less expensive after you die. It can also keep most, but not all, of your estate confidential. The living trust document does not automatically become a public record at the courthouse.

    A testamentary trust is a bunch of extra pages and paragraphs in your will. It is often more expensive now, but can be more expensive and more of a headache for your family after you die, and the process moves slower. The will has to be filed at the courthouse, and it becomes a public record, inlcuding the terms of a testamentary trust that is embedded in the will.

    A living trust requires you to transfer most of your assets into the trust now, while you are still alive, shortly after the trust is created.

    That means changing the title on your brokerage accounts and bank accounts. It also means changing the legal ownership of your house and any other significant assets. If you don't put assets into a living trust before you die, it will not work.

    If you did not do that, then either you don't have a living trust, or you did not complete the process after your lawyers wrote your "estate plan."

    A living trust is usually revocable, which means that while you are alive, you can change the terms of the trust, you can pull assets out of the trust or add new assets to the trust, and you can also dissolve the trust completely and start over if you need to.

    This advice applies to the USA. This advice is probably applicable, with some variations, for Canada, the UK, Australia and much of western Europe. Anywhere else is beyond the scope of my knowledge.
     
    Last edited: Oct 12, 2024
  8. mervyn

    mervyn

    op needs to clarify his jurisdiction before one can comment, some countries are different.
     
  9. California, US.
     
  10. mervyn

    mervyn

    lot of estate lawyers, there is a guy cummingham legal on youtube seems very knowledgeable, 5-10mm to take you in as client, not cheap.
     
    #10     Oct 23, 2024