Trust and Wills and the Modern Family
Let us put out some sparks before they become wild fires
What are we talking about?
Do we really know what a will is? Do we really know what a trust is? But more important can we handle death giving in a loving way? Can we really divide up our stuff among loved ones? Make no doubt this is a hard subject.
A traditional nuclear family makes it pretty easy. Everything goes to the surviving spouse and then equally among the children on the death of the last spouse standing. Now that is pretty straight forward and fair to everyone. Or is it?
And what of the two children from a previous marriage and two from a current marriage. And then the father dies and the step-mother and mother is left to handle it. Now that is a big problem.
Let us just discuss it so we can make up our own minds on how to best deal with the situations that can arise. First let us get a standard definition of what these things mean so we are on the right page. This is supposed to be a non-legal overview and so there is no advice here and the definitions are not legal speak.
Where do you stand?
Do you have any of these in your life?
Just some cool music to listen to while schlogging through this subject
I hope that poll made you stop and think -- bet you never thought about your parents and a will together, except theirs.
Will: legal-dictionary.thefreedictionary.com/willWill. A document in which a person specifies the method to be applied in the management and distribution of his estate after his death
Trust: en.wikipedia.org/wiki/Trust_lawWikipediaIn common law legal systems, a trust is a relationship whereby property is held by one party for the benefit of another. A trust is created by a settlor, who transfers some or all of his or her property to a trustee. The trustee holds that property for the trust's beneficiaries.
If you look at it they are fairly simple devices and just common sense dictates what they are supposed to do. So drawing them up is not rocket science and surely not the cause for worry.
Contingencies that could occur are more a matter of logic and possibilities. But sometimes they present us with priorities that are difficult to deal with when we sit down to discuss it.
So just how do we discuss it? Yikes. Well here is the best way and it is still not the easy way, because there is no easy way. What does a dad do with two sets of his own children? And how does a step mom deal with whatever are the decisions.
Cultures vary greatly as to what tradition holds like daughters and sons and the order in which they were born.
So here are some practical "mechanics" on how to approach the subject.
Sit down alone and write out what you want. Keep it to yourself for awhile and re-write it after thinking about it. Then go through it with a third party confidentially. Just to get their feedback and advice. I am not talking about a lawyer or someone who gets something from your will but a reasonably close "disinterested" party. See if they think it is fair to assert your position.
Let your spouse in on it but keep it to yourself for more time and suggest that your spouse do the same thing. Then you are ready to discuss it between yourselves. They will have differences.
Now you must deal with the differences. You can fight over it. Or you can try to work it out calmly with love. The big question is how do you divide it up between the children you both have and the children you have from a previous marriage.
Here is the best of all worlds when it comes to this. If the spouse with other children has been a supporting and responsible ex-spouse in the previous marriage and afterwards then there are basically three estates or if remarriage on both parts, four estates. In other words there really are two homes to be split up as far as children go, If you look at it this way then the divisions are from the separate estates or portions thereof.
So you would take the one spouse with four children and divide up that half so that each child gets 1/8 + what they get from the other spouses half, which could be none to 1/8. This could go on for any multipliers and even previous children from both sides of the marriage.
Note here that in community property states there really are just two estates but you can separate them in your calculations.
Somethings we just must do and all the whining in the world will not make them go away.
Trusts in our scenario.
Trusts are more complicated legal constructs. They should have two purposes in general. To legally avoid taxes and to preserve estate assets during a certain time period. You see if one spouse dies before the other the assets are in trust and there is no inheritance tax or distribution until the surviving spouse dies.
This also means that as it should be the surviving spouse enjoys the fruit of the marriage until they pass on. Of course sometimes it all gets used up before death and that is sometimes a bummer but as it should be. If it is all used up and there is still long term care needed that can be disastrous for families.
What it really takes.
A fair assessment of what you have and a fair assessment of what each child needs. You may even decide on giving unequal portions because of need. For instance one child might have 4 children of their own and another spouse might be rich and childless. Children may all be equal in the eyes of their parent but not equal in their needs. You may also have a spendthrift child where giving them money is just plain foolish.
Just like life, if the distribution of your estate is done in loving thoughtfulness you really cannot go wrong. I suggest if it is just too much for you then get over it and get it done anyway. Once it is done you can sleep better and not even think about it.
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