Estate planning (ICE): will and trust
August 17, 2015
This is the main body of our estate plan.
We’re setting up a revocable trust, the two of us as co-trustees, and most of our assets will be tucked into the trust. As a married couple, we’re electing to create an A/C trust where upon the death of the first spouse, it’ll be split into a survivor’s trust and a marital trust. This protects the deceased’s half of the trust for the intended beneficiaries.
For a real life example, let’s say I die first. I always die first in these scenarios. This leaves PiC and LB with our entire estate. It’ll be split into two trusts: PiC’s and mine. Mine, the marital trust, will be held in trust for LB’s basic needs (food, shelter, education) and for the support of my Dad (food, shelter). His half, the survivor trust, will be his to use as he sees fit for basic needs and so on. Now, should he go on to remarry, his next spouse would presumably have access to his half of the trust, but she can’t lay a finger on my half – LB will never be a modern day Cinderella left destitute because of an irresponsible or conniving second spouse. Uh, not that PiC would be so careless as to marry such a person…. but just in case!
Same goes in the reverse scenario so we can always rest assured that if one of us isn’t around, LB will be provided for.
Now, if we both die at the same time and are survived by LB, the whole trust will then be held for LB and Seamus’s care, again for basic needs until ze comes of age. LB would be the beneficiary of something like 95% of the trust, the rest would be designated for Seamus and our parents assuming they’re still around to need it, but we’re building in safeguards there as well.
First, we’ll designate trusted executors and trustees of the estate to manage the assets so that the wealth we’ve saved for hir continues to grow and can provide for hir as long as necessary.
Second, we’re designating different people to care for hir because I simply don’t want there to be any conflict of interest between the person taking care of hir and the people who can disburse funds from hir estate. You never know what can happen over the course of a childhood and frankly, I think having too free a hand with the estate can mean that liberties may be taken. I wouldn’t pick people who I’d expect to do that but to be completely honest, there are very few people I trust to manage money as closely and carefully as I would, and if my own life experience with money has taught me anything, it’s that things happen out of your control and alter the entire course of your plans. People who haven’t proven themselves through adversity may not respond in the best hoped way to obstacles like job loss or other financial misfortune. I would be a fool not to plan to protect our assets for LB should hir caretakers hit a rough patch.
Third, ze doesn’t get the estate automatically upon turning 18. Ze has to prove that ze isn’t just going to rely on it like a crutch, showing us that ze is responsible with money and earning hir own way. We’ll support hir through university but ze has to be responsible with that gift, too. And it is a gift. I had to pay my way through college and I think that was an important part of making my character.
Last, if we die under suspicious circumstances, everything goes to charity. Ok, that sounds like I’ve watched too much tv, or read too much news, but I don’t think it’s the worst fail-safe to have. And even if we don’t die under terrible and suspicious circumstances, it may still be where much of our wealth goes in the end. I don’t expect my kid to be a bad seed, but who does? I intend to be honest with LB about the estate, in age-appropriate terms, because I want hir to learn to manage money responsibly but I’m not blind to the fact that like my brother, ze may simply not be anything like us and may find that having all that accumulated wealth is crippling rather than a tool for good.
I don’t intend for hir to grow up without us but, while all this may seem morbid, the whole point of this exercise is to make sure that the worst cannot happen. One of the worst things I can imagine is LB being alone in the world, both bereft of family and of material support, left to grow up in far worse circumstances than I ever did.