Entrusting future money for my Son

[JNChell]

Hello. I’m hoping that I can find direction here on how to secure future funds for my Son. More to the point, on how to protect the funds if I should pass before he is of legal age to take responsibility for the money. I have a life insurance policy in place for him, and would like to add one or two more. I’m also going to start an account for him at my credit union. He’ll be 4 in December. My question is, how do I protect this money for him in the event of my passing? I just want to make sure that it doesn’t fall into his mother’s hands some how. This money is for him. Any advice is appreciated.

[mama-wolf]

Hi JNChell,

So, I am not an attorney, but my stbx is and her primary area of practice is estate planning and I have been around this kind of subject for more than 10 years. I’m not sure where you live or what the laws are, but you should be able to set up a trust for your son, with someone you trust (pardon the pun) to administer it on your son’s behalf if something happens to you.  It will cost a bit to have it set up properly by a professional (DON’T just go with a cheap online legal service—use someone who knows what they are doing), but if it’s something you’re concerned about, then it’s worth the investment.

mw

[GaGrl]

My DH is an investment advisor, and he suggests that you see an estate attorney about a trust.

[prof]

My dad did this exact thing after I finally told him about how bad my marriage was.  He saw his estate attorney and reconfigured his will so that all the money meant for me would go into a trust so my wife couldn't touch it, as long as we're still married.  (I've since filed for divorce.)

There also would be a trust set up for my son (he's 5) if I were to die before my dad.

So yes, these things are totally possible.

[JNChell]

Thank you all for the advice. I figured as much on needing to go through an estate attorney. Another concern is that my Sister is a secondary beneficiary to the money. I know that she would save it for my Son, but another angle is if she would pass before he’s legally entitled to the money as well. If I put these policies into a trust, and my sister and myself are no longer living, how do I ensure that my Son will receive his money? I have to assume that he won’t be tracked down if the trustee isn’t around to distribute the to him.

Sorry. Thinking out loud. I should talk to an attorney. I was just hoping to find a way to handle this by myself.

[mama-wolf]

TIf I put these policies into a trust, and my sister and myself are no longer living, how do I ensure that my Son will receive his money? I have to assume that he won’t be tracked down if the trustee isn’t around to distribute the to him.

I’m pretty sure you can put just about anything you want in a trust, to include naming a back-up trustee to manage the money if something were to happen to your sister.  And I believe you could even name a bank as trustee (I think they’re called trust officers?), but I’m a little more fuzzy on that. 

Either way, definitely let an experienced estate planning attorney set it up for you.  Preferably one whose primary practice is trust and estates, rather than one who mainly does something like family law or business law.  You probably already know this but attorneys have specialties a lot like doctors do (like cardiologist vs.podiatrist)... .you are making a much better investment of your money to hire one who specializes.  And it may go without saying, but ask several about their fee structure in order to price compare... .some will do the work on a flat fee basis, which can be better than being billed by the hour, and you may even find some variation in just how much some will charge for the flat fee (kinda depends on how complicated the trust gets).

mw

[livednlearned]

If it comes from a 401K or similar, some of the accounts don't make it easy to point back to an article in your will that specifies how that money should be handled. On one of my 401K accounts, you can only pick a beneficiary and that's it. There's no way to even enter information about the will. Which is not a good situation if you have a minor child who could inherit money that might be subject to the influence of his other (BPD) legal guardian.

I locked everything up tight by talking to an estate attorney and then moved everything to accounts that would accommodate my wishes.

After how much my ex drained my bank account and ruined me financially, there is no way my money is going to end up anywhere near him.

I have a letter to my son that the estate will make available. It is my way of explaining, in my words, why I made the choices I made in the will. If he ever reunites with his dad, I want him to know about the financial backstory so that he isn't hoodwinked into giving him money or getting duped by revisionist history. It's unfortunate to have to focus so much on money, but n/BPDx was terrible with money during our marriage, tried to ruin me financially in the divorce, and I refuse to let him do any more damage to me or my son after I pass.

All of my ex's child support payments to go therapy for my son. It's expensive because it's out of network, but the psychiatrist/therapist he sees has been profound. I wanted my son to know that's where child support when, and why. Ex is paying for another man to reparent him in a deeply therapeutic way. S16 has been seeing this T once a week for 3 years, and it is the best money I have ever spent.

It's good you are thinking about this stuff early.

[ForeverDad]

If all you're trying to preserve is proceeds from life insurance policies, then you probably don't need a trust now.  Life insurance policies have Beneficiary and Contingent Beneficiary declarations.  For example, this is the pattern I followed for myself.  I set up my son as 90% beneficiary along with one of my siblings as the other with 10%.  If either died then the other would get it all.  If both died then the contingent beneficiaries would she or get percentages assigned.

Because my son is a minor I inserted this in my son's name box:  "In trust for {son} pursuant to will dated 01/01/2018".  That way a trust is not set up until I die and insurance pays out.  My will states that any monies will be available in portions over a few years as the trustee approves, and even when he becomes an adult, so he doesn't promptly squander it on fast cars, booze and girls.

However, an estate attorney could advise you if your wishes (or assets) are more complicated than that.  Also, once you are divorced, presuming the divorce decree does not attach to your items for trust, then you can and should rewrite your will and change beneficiaries however you wish.  Don't forget to change beneficiaries for all your accounts, including your retirement accounts.  Your options may be limited during the divorce, so until the divorce is complete, follow the estate attorney's advice and cautions.  Legal rules don't always make common sense.