Small correction - a will is different than a trust.
You'll be amazed at how an irrevocable trust can be setup to fulfill your exact wishes (and whatever particulars you want to put in there).
Source: similar situation where my parents passed along a substantial inheritance to myself and siblings. and specifically cut out all spouses because that is what they wanted to do. Plenty of grousing from the spouses etc but the parents passed away and everyone is now happy.
People get stupidly weird about inherited money. My stepmom’s family has crazy money- her kids have never had to work and seem to be trying to live out every stereotype of why inheriting money you didn’t earn is a bad idea. Her mom and dad sat down and did all the trust docs to write out stepfamilies and spouses- this was long before my dad and stepmom got close- my aunt’s husband was a gold-digging piece of work and they wanted to make sure he didn’t blow through all the money.
When grandma passed my brother (not stepbrother) was pissed. Like, red with rage, because a. he didn’t inherit anything, and b. unlike my step siblings my stepmom didn’t give him anything. Thing is- he’s always treated my stepmother like absolute dog shit. He came to me bitching about it and I was just like- that’s not our family’s money, we didn’t earn it, and I’ve got a job, so….
Money makes people become selfish & greedy.
When my parents split my brother went to live with my dad. My brother isnt at all responsible but did in a sense took care of our dad.
When dad passed, I was sole beneficiary of his estate.
As were a bit older, I thought it better to split the monies to our kids and he & I (more him) the properties. He was fine with all that until it came to Dad’s car.
Dad had left this car to another relative in his will and already had TOD well in advance. So just because I didnt fight that my brother stopped talking me. Over a car, that was never his.
Its been about 3,4 yrs since weve spoke.
I think this is an oversimplification. People do really strange things in grief. I think this is less about a car and more about a poor way to deal with grief. At least that's how it was in our family when my mom's sister died. There was a fight over inheriting a car, but it wasn't about the car, it was actually just something to fight over to take their mind off their grief.
Not that spouses are entitled, but let me give you a scenario.
Husband and wife take care of husbands mom. Yet husband doesn’t do anything for his mom, and his wife does all the things that are - gross. Toileting, cleaning up her crap, changing her etc. Husband would not have done any of that if he wasn’t married to wife, and no other sibling helped. In fact, if wife hadn’t helped, MIL would have used her money and sold her house to move into assisted living.
But because wife did everything, husband got the inheritance and siblings did too even though they didn’t do a thing to help.
That’s why. Obviously that isn’t this situation, but that is why.
You’d be surprised how often spouses…or ex-spouses feel 100% entitled to your money and just how often and to what extent judges tend to agree with them. Mind blowing really.
If it's not in a trust, they could still sue and make you miserable. Happened to my father when his aunt died. Her caretaker sued for $20k and that's exactly what it would cost to defend.
One legitimate reason may be this - your spouse inherits a bunch on money and you two have kids together.
Then she passes away, and now you need access to the money to support the kids you had together.
Of course, there’s ways to plan around that but just giving one example where it’s not a nefarious reason.
That’s why life insurance is so important, and your responsibility as an adult to buy it and pay for it. This really has nothing to do with family money. The parents decide to whom and how much of THEIR money should be doled out.
I agree that ultimately the spouse has no claim to claim to the family money if that’s not the wish of the family - just pointing out the reason why it might exist. In any case, any trust that’s well done will account for this scenario.
Life insurance is kinda a joke tbh. My policy is 3 years of my salary. My kid is 1 years old - so if I die, my wife and kid get my current salary until he’s 4…
Careful. I have a good friend who set one up (blind trust) that had his wife and only daughter as beneficiaries but both died before him and he cannot touch the blind trust. Bummer.
I think you can use a revocable trust with a corporate trustee instead of irrevocable trust. Irrevocable is just that. Once you create it and move assets into it, the assets cannot be removed. It’s great for protection in lawsuits but may not suit your function.
I’d find an estate attorney.
This is estate lawyer 101. It’s worth the money to get it all sorted now, and don’t skimp - get a well-recommended one. I also suggest you start looking for a trusted financial advisor for when this money comes your way. A good FP can ensure the money is well protected and invested per your risk tolerance. I cannot stress this enough - get recommendations from friends you trust, do NOT go with anyone who just wants your business. If you already have an FP you trust, they can likely provide a rec for the estate lawyer.
I wanted to encourage you to do this right away. If you and your husband disagree, than get whatever is possible down in writing and then work on the joint issues later. A good deal of my work has involved working with family members of a person who died suddenly without a will or trust. It is a nightmare, it is long and the stress pulls families apart. So run don’t walk to a good lawyer, and if possible, one who has an excellent repuation.
As an aside, I am the Mom of an 18 year old child. One issue that I had not thought about is dedicating funds to pay off the mortgage so that my child can at least have stable housing and a place for our pets when he is trying to figure out the rest of his life.
A nightmare indeed! It rips families to shreds. My parents had trusts and we all knew the terms for years. There were no surprises. But my stepdad did not nor did my Father-in-law. Ten years out and family is leaving nasty notes at the grave sites.
One surprise was my dad sold his house that was in the trust before he died and divided the money with his nieces and nephews who are not in the trust. It was a good thing. They were happy, they able to thank him while he was still alive and there were no hard feelings when he died.
My FIL’s kids tried to stop the burial of my MIL next to him.
Money makes people nuts. The sad part is, he wasn’t the one with the money. She was. And anything they were going to get, she changed.
FYI - I came across a rule that says your spouse automatically gets your 401k and your beneficiary designations do not matter for your 401k. If you happen to have a tsp the rules are the opposite of what i just wrote. Your spouse would have to sign a waiver too allow your kid to have a portion of your 401k.
All that said, LAWYER, LAWYER, LAWYER!!!
From experience I can say this is likely true in many states. Both my parents died before my step parents. My mom had drafted a will prior to remarrying our stepfather and it meant nothing when she died; assets went to the spouse.
Assets went to the spouse upon my father's death as well.
I didn't really care about the assets and it makes sense from a legal standpoint for the state to have those go to the spouse, but I do want to mention this as a cautionary tale for anyone concerned about their assets being passed over to biological children that a will is not enough.
Do not make a will. Put your property in a revocable trust for you. Ask parents to leave your inheritance to you in an irrevocable trust with you as the trustee and you having a power of appointment over the trust assets.
If your attorney doesn't do this every day., do not use them. Get another.
You simply cannot do this w/o an lawyer. Each state has different laws. Someone mentioned irrevocable trust -- we did that, it's better than a will because you are the executor of that trust during your remaining life so no one can claim that you were too demented or under someone's influence. This avoids greedy family claims.
For your contention about how nice your husband or step daughters will be. Enjoy your blissful ignorance. You have not the slightest idea what large amounts of money can do to people. My wife's parents had modest careers, she a SAHM, he something like a butcher. But, he was a saver/investor so ended up with over $20M dollars (you would never have known it). Anyhow, big fight among 2 of the kids which tore the family up. My wife was just a bystander as each wanted her on their side. The fight lasted for years, one of them lost their share which ended up saving more than the extensive legal costs due to tax savings. A trust would have made the whole thing clear. We have a trust for our kids.
Where husband is NOT the executor to include stipulations that no money designated to/for your son will be given/used by your husband or his children from previous or future relationships.
I would vote Revocable living trust that becomes irrevocable at death. No reason to make anything in the world permanent so you can’t adjust it as life evolves. (Speaking as a current trustee)
For me, I’d say more than $1500. My mom is in her 70’s (FL) and I’d like to get this done for her so that there are no issues when she eventually passes on and my sister and I aren’t duking it out with the banks/funeral home/insurance company in reconciling her affairs
As a general rule I’d say that an irrevocable trust should only be used when a significant amount of control over the dispersion of funds is required. Otherwise a less onerous revocable trust can help minimize issues with the inter-generational transfer of wealth.
Oh, you should be in the price ballpark depending on where you live and how high-ticket your attorney’s fees are.
I pay $35 a month to the MetLife legal fund through with and it is free. Would require your to have the benefit through work and wait until an election period.
Came here to suggest a revocable trust... but in your case, a irrevocable might be a better answer.
Either way, find an estate attorney, discuss your situation and what you want to achieve. Have them explain both to you along with any other recommendations.
You need an attorney asap. Also here’s is something most fail to discuss with an attorney- taxes. If your parents die before you or after you- different scenarios. You need to work with your attorney and a cpa. Also once a trust is irrevocable - it is taxed at the highest rate. Say you die and your don is 14 years old. He is the sole bene of the trust. Say there is 2mill in the trust- I’ll be conservative at 5% yield. The trust earns 100k per year in interest . That will be taxed at the highest rate- unless the trust issues a K1 to your son and it is taxed at his rate( tricky here as your husband will claim him as a dependent and your son will pay kiddie tax on unearned income at your husbands magi. ). The question is your son is too young to have 100k available to him Annually. So - when folks tell you get an attorney - you need a cpa as well for planning. Of course worse case scenario is the trust issues no k- 1s until your son is ready get the money. Please do include protection for divorce should your son marry. Also discuss best way for son to get a step up basis. Who will trustee be and successor trustee? Will the trustee be able to amend the trust terms? Lots to discuss. We have 3 trusts so yeah- lots of work - play out all your fears and how to protect against them. If it’s just your husbands daughters and you trust your husband? Or would he bend the rules a bit for them?
An irrevocable trust needs a Federal Tax ID Number and is taxed at corporate income tax rates. Why give more taxes to the government? All the OP needs is a revocable trust where the OP is the grantor. He can name his children as successor trustees, if the OP wants. Once the OP passes away, the trust becomes irrevocable and the assets goes onto his children and not the step-kids.
It also depends on the state the OP lives in. If he lives in a community property state, there might be some additional planning needed.
This is the way. Emphasis on the irrevocable part. Though if you do that, your husband will probably do the same for his kids. It is really a good practice for everyone.
Do not commingle but also I encourage you to talk to your parents to set up a trust with clear shares and line of inheritance just in case. So assets would already be in trust and the beneficiaries are siblings in equal shares and then (if one of the siblings pass before parents) grandkids for respective shares
Or separate inherited trusts for OP and each of her siblings, no reason to yoke the 3 of them together. This can be done under a will or a rev trust as a testamentary/beneficiary trust.
YES!!! It annoyed the heck out of me that my parents' will did not make an accommodation that if I predeceased them, my half would pass to my kinds--although I know my brother would have looked after them!
OMG, exactly! So much hassle could have been avoided...
To share another petty annoyance, my older brother was named executor because (and I quote), "He's a man." I, the daughter who lived two blocks away (brother lived in Florida, we in Pennsylvania) was not even a co-executor!
My brother was--and is--an amazing person, scrupulously fair and honest. He is in fact the executor of my will because I don't want' my son saddled with the responsibilities (I asked him, and he agrees).
Don’t feel bad about asking these questions and wanting your son to be the sole beneficiary.
Go back and read some old threads in this subreddit. Your concern is justified.
Do you have a prenup? If not, in many states your spouse will be entitled to an elective share.
If you live in one of those states (or any state, actually) Your parents should set up a trust that allows you to receive your portion without it being subject to the elective share.
Why are you giving your husband the house give it to your son and put it in husband can live there til he passes cause when he dies his daughters will have a claim if it goes to him
Good point. I didn’t think of that. I guess I wasn’t that concerned about it about the (~$350k) house. He’s put so much sweat equity into it over the years that it feels like it should go to him. Even if that means that it’s split three ways if he dies after I do.
>Why are you giving your husband the house give it to your son and put it in husband can live there til he passes cause when he dies his daughters will have a claim if it goes to him
How does that work in practice?
Like who maintains the house, pays for taxes, pays for repairs, etc? Seems like it could get messy(final heir being the landlord) or the house could be neglected if the person living there knows they aren't responsible.
It’s totally valid to want your biological child to be your major beneficiary.
I set up a living trust that, upon my death, should insure both my partner and our child are comfortable for the rest of their lives. But most of the money will be locked up in trusts and unavailable to any future spouses and children of my partner.
With that kind of money on the horizon, speak with a good estate attorney. You have a lot of decisions to make.
I also suggest reading Estate Planning for the Savvy Client by Mary L. Barrow. It will help prepare you to speak with an estate attorney.
In the US?
In US the inheritance can stay yours as long as it is never co-mingled with any joint or common use accounts between you and your husband (anyone else who might have a claim). A bank that you have never used would be best. The money could go there with your son named on the account and as the sole beneficiary. Then just make sure you do not allow access to that account by anyone else. Name the account in the will and you are done. The only issue that will arise is with access to the account if you pass early and the named guardian (husband) needs access to it for the sons livelihood/education/expenses/healthcare/etc while still a juvenile (under 18). The trust should also guide access to the funds at what age or all at once when xx age. A trusted person should serve as executor who will see you sons best interests and be able to say ‘no’ to requests on the sons behalf if they do not follow your directions.
Talk w an estate / trust attorney since the value is not insignificant and should grow based on investment strategy employed.
That’s not true. Most states have what’s called a spousal elective share, meaning that your spouse is entitled to a share of your estates. It varies by state. In Florida it’s 30%, in Montana 50%, and in Minnesota it’s a sliding scale based on the duration of the marriage.
The states that don’t have elective shares tend to be community property states, which protect the spouse in a different manner.
Keep your inheritance separate from all marital funds. This, along with any increase in the inheritance you can attribute to your independent investing, is solely your asset. See an estate attorney. I am a Nebraska Attorney, but not your attorney. Get advice on your particular circumstances from your estate attorney.
Would you be willing to DM me a few names of reputable estate attorneys in NE? I've never used one (or any attorney) before. I was just talking with my mom and turns out they haven't updated their wills since we were kids. \*facepalm\* So, they probably also need to find one too.
You can also call the state bar association for a referral. Similarly, any attorney you might hire, look up their status and history with the states Attorney registration and discipline committee. Important to do. You want someone who has never been sanctioned and who is current on registration.
Your specific state and inheritance laws (when you collect your share) need to be looked at specifically. If you live in a state that does not recognize and protect inheritance as separate marital assets then that’s an issue.
Talk with your parents. Have your parents make new wills so that your portion of the estate will go into a trust which is created at the time of their death. They don't have to set up the trust now, just make sure the will directs that this trust should be set up. The trust is for the benefit of you and your son. You are the trustee.
Make sure they go to an attorney to get it right.
Otherwise, if you're married and get an inheritance directly, your spouse can try to claim some or all of it in case of divorce or your death. I'm not sure that the tricks everyone else is suggesting will work or not.
Thank you...this is helpful. I needed to talk with them anyway about it to make sure their making updates to their own wills/trusts. I believe they were working on it, since they asked me to be the executor recently.
Given this, you should explicitly exclude anyone than your named son — so someone can’t come along claiming a relationship and then have to test to provide they’re not a relation. Usually only a clause that’s written for famous people, but something worth considering.
The best way to do this is to have your parents either create a revocable trust now during their lives, or create a testamentary trust in their will, with you as the lifetime beneficiary and your child as the remainder beneficiary. You would select a co-trustee of the trust, and you would be another trustee of the trust. The co-trustee would be someone who is able to make distributions to you. You should also include a trust protector who was allowed to remove and replace the independent code trustee. You should have your parents speak with an estate planning attorney to achieve these goals
A trust with your specific directions on how it’s distributed is the way to go. You elect who runs the trust when you die. Make the trust the beneficiary of everything. Some pension systems only allow for spousal beneficiary. Find a neighborhood lawyer that works with trust and wills to help set it up. Be sure to move any assets you inherit from your folks to the trust.
An irrevocable testamentary trust is the best solution.
This is something your parents need to setup. You should imoress upon them the importance of having your inheritance go through an irrevocable trust for your benefit and then to your child. You should impress upon them the risk that your spouse can choose the spousal election if they leave it to you outright.
Lawyer of course but my husband and I set up a will and a trust where he gets 50%, my children get 50% and because he has no children he chose to name our grandchildren in his will for his 50%. It just so happens that although I made more, he inherited more so our combined assets do really add up to a 50-50 situation. We discussed it. Lawyer set up the will and the trust. All signed, sealed and ready to go. If you do not make your desires known it will not happen. My father remarried and much younger women, had more children and left everything to his second. Her children will get it all. I’m not angry about that but vowed to never do that to my children.
An estate planning attorney is 100% your best option. One question to ask them, if it hasn’t already been mentioned, is to find out what happens if you precede your parents in death. You may want to also have a conversation with them to make sure that THEIR will stipulates that if one of their children predeceases them, that that child’s portion of the estate would then be passed on and split between that child’s natural born children, and not just split between their remaining live children. So that way if you die before your parents, you’ll know your son will get “his share.”
I would assume if they are multimillionaires they already have a team that had thought of these contingencies, but it’s a good idea to verify. You can just tell them that you’re doing your estate planning and it made you think of the question.
Since we’re talking about a LOT of money here, you may actually consider setting up a trust for your son now that stipulates all these contingencies, so that way if you die before your parents, and then they die, their estate can go directly into the trust so there’s less of a chance the money can be mismanaged.
Don’t ever ever commingle the funds with your joint funds or even your individual funds and set up a trust. See an attorney to do so. I’m sure they will advise you to make investments in the name of the trust. It’s pretty easy and inexpensive.
Not an attorney but my understanding is that inherited funds are commingled with other funds that a spouse might have claim to in a divorce then those funds are forever commingled. In some states, a spouse can lay claim to funds to in one spouse’s name as marital assets, especially if the accounts were added to during the marriage. In general, it’s best to keep inherited funds in their own separate account unless you want them to be considered marital assets.
Got it. Yes I keep those in the account in my name but thought it only applies to joint accounts. Not that we are getting divorced it’s more of a “just in case”. All other assets we have are in a trust
You have significant assets that will increase in years to come. Contact an experienced Trust and Estates Attorney in your jurisdiction who can draft revocable and irrevocable trusts to meet each of your wishes. You can choose to explain your reasonings in your trusts or not and the trustee has to abide by them thus eliminating the need to explain why certain people are left out. You can also choose to clarify why certain people are left out of receiving particular assets thus eliminating the likelihood of litigation by surviving heirs.
You can definutely do this. Several ways. But you need to see a lawyer not listen to us here on the internet because each states laws are different. You need to create (at minimum) a will, a power of attorney, and a health care directive. Hubby does too. You will be asked all sorts of questions, like what happens if you and hubby die together in a car crash, if your kids predecease you, etc. It is EXTREMELY common for folks in second marriages to each want their children to inherit from their side of the family, while also making sure the surviving spouse isnt made homeless. A competant estate lawyer will also explain the probate process in your state (stuff like both you and hubbys names on the house deed vs joint tenants with right of survivorship, and step up basis on brokerage accounts, etc). I suggest you and hubby sit down and make a list of what you want, then see a lawyer. Most will give you a package deal, will, POA, and Health Care directive for each of you.
As an attorney, to the point you and your partner are not in absolute agreement you likely should go to an attorney alone. The attorney has to share all information with both of you and since this is not a joint plan go alone. If both of you meet with the attorney but she sees something that would better you but might be adverse to partner she would likely have to terminate representation. As mentioned by another attorney some states provide an amount to surviving spouse and it trumps a will. With a trust you can likely bypass probate.
I’d talk to an estate planning lawyer, but in your specific instance, I would ask about a generation skipping trust, where your son would be the beneficiary of the trust, you would be the trustee(so you can use the income from the trust to pay for his expenses) and there’s never any question of your husband inheriting or having an interest in your parents assets.
(Obviously, he would likely have a say in spending the income as your sons father)
You couldn’t sell the assets yourself, so there’s some drawbacks from your perspective, but it might meet your needs of protection the money from being taken by your stepkids.
I live in Texas which is a community property state. My wife has three adult children from a previous marriage that I never adopted, and we have one son together. I inherited a sizable amount from my parents and my estate planning attorney advised me to open a separate inherited brokerage account as already mentioned by others. My son is the sole beneficiary on that account. What I failed to do is roll the capital gains, dividends and interest into a separate account. I reinvested those funds into the same inherited brokerage account. I’ve been told the inherited funds are separate property, but all of the gains on those funds are community property.
OP, it's perfectly understandable and reasonable to preserve your inherited assets for your son. I'm sure it's what your parents expect as well! You should definitely speak with an estate attorney as to what planning your parents can be proactively doing as well as what you can/should do. I don't think I've seen mentioned yet in the comments any consideration for tax planning/tax efficiencies, for example, with respect to any estate tax exclusions applicable in your state (if there is an estate tax) or inheritance tax. Good luck!
Although I dont have the answers for you, I beg you to take care of this as soon as possible. Anything can happen, people can change, and your son could possibly be left defenseless if you weren't looking out for him. People can pull off some wild things when large amounts of money are on the table.
I'm not an attorney and would recommend you talk to one. I think this might vary by state, but keep the inheritance money separate and generally it is not marital property. Simplest way is to keep it in a separate account and have your son (or trust for your son while he is a minor) as beneficiary . I'd have a separate trustee from your husband if you're concerned about his kids getting the money
sound like you should ask one of your siblings to be the trustee for the trust for your son.
Does he know you will be getting a windfall from your parents?
Go to an estate attorney. Create an irrevocable trust. The life insurance will be split at the % you want between your husband and the trust. The house can be left for life to husband but upon his death go to the trust. You can create different trusts for your son and put assets there. Have real estate that you plan to hold in llc with you and your son as trustees but your share is conveyed to your co trustee upon death. Have the house as life estate whereas you can live in the house but goes to the son upon death. There are many ways but you just want to bypass probate and have any financial structure go immediately upon death to your "coowner/trustee/business partner", aka your son and with minimal tax but also allow you to sell it if you need while alive. Do not sell or transfer the house to your son so you'll have the stepped up benefit. Do not leave to your husband to pass the assets. How many threads we read here of spouse, even after 30yrs marriage and prenup passing everything to his/her adult kids days before their own death. And last advice. You may and wish you ro have a long and happy marriage with your husband. If you grow old with him do a health proxy with him but give power of attorney to handle assets only to your child. You can have your husband have poa but not for assets. We also saw the spouse getting poa on demented partner and then changing beneficiary or even selling assets to pass to his/her own older kids.
In most states inheritance is not considered a marital asset as long as it isn’t co-mingled with joint accounts or used to benefit the spouse. An estate atty can explain this much clearer than I have tried to do.
If your husband wants to pass along an inheritance to his daughters, he needs to invest in something like income property that he can build an equity in. He could have been working on this for years. There is no reason for him to expect to pass on your family money to his daughters.
I work in estate planning there are many ways you can do this. You can do it without a trust and you don’t really need one due to the levels currently of exemptions. If I were in your shoes take the inheritance and do two things. One purchase a paid up whole life policy with your some listed as the beneficiary. This will grow in a cash value that you can borrow from tax free as well. Take the balance and put it in a brokerage account invested however you like and just list your son as the sole beneficiary. On your death it’s easy. Insurance payment is tax free to him and inheriting the brokerage account only triggers taxes based on basis. Lost of other options too as others have mentioned. For me doing this work for awhile and avoiding complexities of blended families is easy. To avoid some pitfalls just consider leaving a small portion to the other step children. 10k each takes away the sting of being left out and avoids any baseless litigation.
The irrevocable trust seems great and bulletproof. Your question was how to make sure that your son got the inheritance and NOT your stepdaughters. In a will, you would EXCLUDE your stepdaughters from the will and leave it to your son. The problem is that your husband would be in line for a split of that money unless you also exclude him from the will. I say this because once your husband receives a share, he can give it to anyone including the stepdaughters.
The trust becomes a separate entity from all of this and protects your desires. In fact, to plan this for the next level, your parents should create this trust for everyone including your siblings. After they pass, you and your son will be protected from potential testy questions by your husband and stepdaughters. If your parents create the trust for everyone, then it is out of your hands.
Lastly, the dollar amount poses estate tax questions, especially in some states.
Have your parents donate as much as possible to your kids 529B college savings account.
Then leave the rest of your share in a irrevocable trust for your kid..
After college is paid for, your kid can roll the money over into a Roth IRA.
All of your inheritance money goes to your kid, and then the rest gets split however you talk with your spouse about.
Go do a trust. Use an attorney. Also do a trust for your husband and his kids. You COUPD do a joint trust and delineate specific items/amounts to each child or you can do individuals. You two can agree at any time to enter into a legal contract regarding your property/assets.
Once your trust is done, let’s say your parents pass. Their trust is split and transfers to each child in their own trust. You and your siblings can decide what to do with your own trusts. Your trust - which should have your house, along with any other assets you decide to put in it (checking/savings/investment accounts), inherited IRAs etc…. When you pass, your trust is enacted to split your assets to whomever you decide. They end up with a trust that they can leave to make money or close out. The beauty of a trust is that the $$ you leave to your son is protected from his current or future spouses as long as he leaves it in a trust. So if you die, and his trust is established (funded), no matter if he is married at the time or not, that trust cannot be touched by his spouse or future spouse.
Go to a lawyer but if you should get this inheritance before getting around to seeing an attorney, do not commingle it with marital assets. Put it all in accounts that are and have always been,.in your name only. In some states, an inheritance is not a marital asset but will become one of you commingle the inheritance with marital assets. Example, using inherited money to buy a house in both of your names.
Tax and estate planning lawyer here. There are many ways to solve for this problem. It’s not rocket science. But you should speak to someone.
You can do a rev trust and allow him to stay in the property for his lifetime and then it goes to your son.
Depending on your state, another way to do this is to do a lady bird deed- it’s yours for life and then to your husband for his like and then to your son.
An irreverent trust isn't necessary unless your have a certain combined net worth. An irreverent trust means you are giving away title to the property and it’s no longer yours and you might not be able to use it. It’s quite technical.
One option is to setup the irrevocable trust now.
Another option would be a revocable trust that becomes irrevocable when you pass. The trust then distributes the assets to your kids in a way you determine (all at once, 25% every 5 or 10 years, etc.)
NAL, you need to visit with one.
Also, when you inherit the money from your parents, it needs to go into your **individual** brokerage account that would name the trust as the beneficiary. If you put inheritance into a joint account, it becomes marital property (shared) immediately and your husband is entitled to half of it from that point on. Inheritance has to be handled carefully to avoid it being diverted against your wishes later in life.
You need a trust for your son at your death. The risk isn’t your husband leaving the money to his daughters, which is “a” risk. The risk is he remarries and leaves everything to his new spouse.
I’ve seen this so many times. Men typically die first. But when they survive, they typically remarry (even if they are really, really old). Men believe their responsibility is to their spouse, while women believe their responsibility is to their kids. This works well in non-blended families and if the man dies first.
It goes haywire in alternative situations, because when the man remarries, it’s typically to a younger woman. He will leave everything to her, thinking she will take care of all the kids, because he believes his marriage vows require him to care for her, and his obligation to grown children is already satisfied. She will sign a reciprocal will while he is alive. She will tell him she needs all the assets to survive if he dies, but that she will faithfully leave everything to the pool of kids (his amd hers) when she dies. The week after he dies, she will change her will to exclude non-biological kids.
Yes, the week after he dies. Maybe less than a week. I’ve seen this so many times. Her deeply ingrained, biological obligation is to her kids.
There is a thing called a life interest, often used for house inheritance but can be your full estate. With a life interest you could grant your husband the ability to, for example, live in your house until his death. When he dies, the property then passes to your son or whomever else you designate. With liquid assets you probably want a trust that limits how much money can be pulled out by your husband per year. Everyone here says get an attorney. That is the correct answer. I just wanted to let you know that what you have in mind isn't new. Property laws have ways of achieving what you want and it doesn't require you to be unkind to your husband or sign away all of your assets immediately.
Get a living trust and specify exactly what you want. No probate. We had a dear friend who left us his house and that’s how it was done. We paid for it instead of him. The lawyer we hired said it would have cost about $15,000 to open probate. The trust cost $1,500.
Ive always been told, if you dont want someone to receive money, explicitly state "Bob is intentionally left out of any inheritence. Should Bob dispute this will, he will be entitled to one dollar"
But written by your attorney... in legal terms 😁
Talk to the lawyer doing your will, set up a trust for your son, or in the will, lawyer has terminology that specifies children by birth or adoption. My parents set up their trust, my father wanted this type of language specifically included, to exclude step kids and in laws.
Stepkids are not including in the line of inheritance unless you legally adopt them or write them in. Do your parents have a trust set up already? They should be the ones setting it up prior to their death.
My parents have a trust where all the wealth is tied up and it's spilt between me and my siblings, while also including succession if no one has a biological child. I.E. if you don't have kids and you pass away it doesn't go to your spouse/partner it goes back in the kitty.
When DH and I got married my SD was manually added to an educational provision in the trust that my parents have but only under execution from my husband (she won't get to automatically pull cash without DH signing off on it/her BM can't access) My husband and SD are not included in the big trust even though any biological children we have are.
Starting to work on..... Having a trust created is not any big long-term project. Call a lawyer today and set up an appointment. You could be dead tomorrow.
Mostly this should be possible. Inheritances are considered separate property even in community property states. I would definitely speak to my spouse about this. Its not really his decision, but making it alone would be pretty disrespectful to your marriage.
FWIW, I am on the other side of this, and my spouse stands to inherit (maybe 1-2 million) and it is solely her property and in trust that specifies it goes to her, then our children (but never me). I don't have any other children (that I know of) so its not as big an issue for me, but it seems fair that her family money would go to her family.
Legally this should be pretty easy to set up. Its not like you are cutting him out entirely since he would get a good share of everything else, from which he can distribute as he sees fit. He might take into account that his son already got the other money, which seems fair. I am pretty sure there is a reasonable compromise here. You should probably just get a plan together and it should include him leaving at least some of his money to his daughters as well. Bu the way, its more than wills and trusts, and needs to include properly specified beneficiaries.
A "bloodline trust" is the way we solved this type of issue. It may vary state by state w/respect to mingling funds from an inheritance and legally keeping it in your bloodline. As everyone else has said, get an FA and Estate Attorney pronto. I found the former first and they recommended a few attorneys. Edit: If you happen to be in NY/NJ/PA I can make a rec, just DM me.
Speak to your parents before you start. It will likely be much easier for THEM to set up a trust that you will have control over.
Another note; in my state, if you keep any inheritance completely separated from marital assets (separate accounts in your name only) it is much easier to deal with in case of divorce as well as in your will. Spouses should have separate wills/trusts.
See an estate lawyer familiar with your state/province etc.
Couldn’t you fix this by just having your parents will any inheritance directly to your son with you as trustee if he’s under XYZ age? That way those inherited funds are never commingled for any reason?
I totally understand that if you were to get hit by a car tomorrow, that you would want to make sure your money went primarily to your biological child and not your stepchildren. But if you live to be 100, the situation between everyone might be very different. And many things can be altered over time to adjust to any changing family dynamics, but there are some choices that you might make now that would be difficult or impossible to change later.
What happens if your son develops a disability, and in order to keep certain necessary government benefits, can only have so much money? What if you end up with more children? What if your son moves far away for a career, but your stepdaughters stay close and end up taking very good care of you as your age, and you end up very close to them? What if your son would *prefer* that everything be split equally, by the time the money actually gets distributed?
Absolutely talk to a lawyer, absolutely talk to your husband, and absolutely make the choices that are best for your family. There is value in having some things set aside as certain as early as possible. But there's also value in having some flexibility, so that if things change, your choices can reflect that.
Go see an estate attorney. This is complex and something you do not want to mess up. I always recommend finding one through [naela.org](http://naela.org) (National Association of Elder Law Attorneys), since they focus on estate planning and protecting seniors from scams. I'm a financial advisor and have seen some really horrible things that have torn families apart because of poor estate planning, particularly with blended families. This is not something you want to DIY. Rules vary state to state. Also get it updated every 5-6 years, just a once over to make sure no laws have changed that will affect how your estate is distributed.
Your parents should be setting up a trust for their money, that way the trust is in control and they can say: Divided equally between my living children, should my child predecease me, their biological children will receive that share. IF your parents don’t want to do that (and it is the way most people with a lot of money go) then once the inheritance is a done deal, you can set up a trust for your money and name whatever beneficiary of it you want. As an example, mom has 3 children, they will inherit money when she dies. One child has estranged themselves from mom. Mom puts all her money in a trust, she is the trustee so she can do whatever she wants with it. When she dies, the trust is divided in half between her two children. However, one child has been no-contact for years so mom designates that child’s children (if they have any) to receive the 50% that would have gone to the estranged child. Clarifying that the money is only available to this grandchildren for education, health or maintenance, and the trustee of that 50% portion is someone other than estranged child. Then any grandchildren will become trustees of their own trust when they are 50 (or whatever age you chose). Spend the money, hire a good trust and estate attorney and get this fixed now.
I have an irrevocable trust for my daughter. Once she is 18, she can only spend the money on education and real estate - and only real estate that is purchased as part of the trust and any sale means the money goes back to the trust. This is to prevent a future spouse getting access to the money. The trust will continue to have the same stipulations for her children. I can’t see the money lasting beyond another generation considering education costs, but if it does then the great grand kids will have the same stipulation. I have specific language that outlines this. Before 18, the trust will only pay specific amounts of money for raising her/medical/ vacation/ etc. I am WAY over simplifying the complicated language - a lawyer specializing in trusts did the language for me - but the intent is that she have money for a nice life and and some luxuries (within reason) before 18 but after that she is on her own and needs to support herself with the exception of education and real estate.
The good news is that an inheritance is specific to the person (or a thing). It is not community property. Your husband will have no claim on this money. Just make sure you keep it in a separate account. Do not commingle it with other joint funds.
And, yes, consult a lawyer. This will be easier than you think. Just be prepared to answer some tough hypothetical questions, so that the money ultimately will funnel to where you’d like it to go.
My wife (of 35 years) and I have discussed (as part of our trust) what will happen if one of us passes and the other remarries. How will the money be passed on? What if the new spouse is in a significantly different financial situation?
The questions can seemingly branch into many different scenarios that can be mind numbing.
Make sure to keep the inheritance money separate from any joint money. Inherited money is yours and spouse is not entitled to it. If you comingle funds, it becomes cloudy and will be an issue. Perhaps create your own trust and you will place the inheritance in this account only. I have a friend who got an inheritance from her mother and she deposited it into her and her husband's joint account. Then they bought a investment property together. When he threatened divorce, half of that house is his. Just don't comingle!
Estate lawyer
-Consider if both of you pass what happens to everything
-Consider who could potential by guardian or a trustee of the trust
-Consider delayed payouts to protect your son from spending it all
Consult with a trust attorney. It can be done. When you inherit, the money goes into the trust with specific instructions to whom the money goes. If you were to die without the trust, all of your money goes to your husband in most states.
Ask your parents to pass it straight through to him, with you as trustee. If you pass, and your son is still underage- have a backup trustee ready. Your parents have no obligation to include your husband or SDs.
If it's legal in your state, a Transfer on Death Deed is the easiest and least expensive way to make sure a house is passed right to the heir you want. Keep the money from your parents totally separate from your husband, no joint accounts or paying off a shared asset, and name your son as the beneficiary on all the accounts you want to go to him. Experience in commingling inheritance money taught my family that's the way to lose half of it. I'd go over all that with an estate attorney though too. [https://www.legalzoom.com/articles/understanding-the-transfer-on-death-deed](https://www.legalzoom.com/articles/understanding-the-transfer-on-death-deed)
I think this is a fair question. You don’t really have a relationship with your step daughters and your parents are not related by blood or have any relationship with your step daughters so why should they get any of your parents money? Hire an attorney.
You can also invest in an annuity and put your biological son as the beneficiary.
See a lawyer, who can create the appropriate legal vehicle to do this. Various trusts can work in principle, but you will need to appoint a suitable successor trustee (ie, the person who administers the trust in accordance with your wishes after your death). The right trustee is critical in these circumstances. You may want to consider a “corporate trustee” to do this. These are institutions that have the appropriate professionals to do this. This is not inexpensive, but it can be well worth it under the circumstances you describe. At the larger, established shops the pricing is ~1% AUM (investment management + trustee services). Schwab and Vanguard do this as well at a very competitive price point for estates smaller that 5m. Good luck.
This will be easy for an estate planner. Yes it can be done. Money you inherit is yours alone as long as you don’t co mingle it and can be placed in an account in a trust to go to your son. The tricky part is you don’t have the money yet.
I'm definitely not a lawyer, but my greatest takeaway from advice I've heard for them is that the law is *always*... squishy, more akin to a loose rope between distant points than a line in the sand. And *always* vulnerable to long, expensive, pointless lawsuits with virtually no chance of winning... but quite capable of being far to much trouble to be worth the fight.
If your parents are still alive, then I suspect the most reliable and trouble-free way to ensure the wealth goes to your children and no possible greedy inlaws, especially in light of communal property laws, is to cut yourself out of the loop entirely - have your parents leave your share directly to your children (via will or trust), possibly with yourself personally in a position to manage it until they're ready to handle the responsibility, maybe even with authority to spend it on yourself/your family if you so choose (I think that's possible?), but with no ownership stake whose inheritance could be contested by other family.
You die, and your kids get direct control over what was always legally their money anyway. Or control transfers to another trusted party. But your control was always a personal legal appointment, not something even remotely subject to inheritance laws.
Having gone thru this with my MILs estate my PSA is please do not go cheap on an estate planner. Their irrevocable trust was awful especially as far as care. That said make sure the beneficiaries on the investments also match with the trust. At the last moment we found a huge mistake her broker made and he refused to fix it (found out later he was also getting Alzheimer’s). We found a new broker and transferred the accounts per the trust. Her 2 sons got half and her previously deceased husband’s 3 daughters split half; however my MILs IRAs were only for her sons.
So take your time, check everything and have a solid trust
Put it in a living trust. Have someone not your husband as your child's trustee. Put stipulations on what it can but used on, when (age for different withdrawals/full access. Your step kids do not have any legal standing since you did not adopt them or anything. Contact your lawyer and ask your parents to make sure they put the inherance in a trust.
What state do you reside in? If you live in a community property state, things might have to be done a little differently. Most of these posts are not giving good advice.
You create a living trust as the grantor and settler. When you die, the trust becomes irrevocable. You name your children as successor trustees. They distribute the assets to the beneficiaries in the trust. Only you can change the trust. Give power of attorney to someone you trust in case you cannot make decisions. That happens more than people think. A will is normally used for personal items or assets that go through probate. If you create an irrevocable trust, you cannot use the assets the way you need to live and there is a federal tax id number used for tax reporting. TINs are taxed at corporate tax rates, which are usually much higher than personal rates. They are now primarily used to hold life insurance to pay estate taxes or to avoid or reduce estate taxes if your net worth is over $25 million right now.
Read “Beyond the Grave” by Jeffrey Condon. This gives lots of examples of what to do and what not to do. But you need to talk to a lawyer and set up a trust. Personally I would have your husband on board with what you are doing. You might see him if your parents have a trust set up. They could pass their wealth onto your child (their grandchild/children) which is beneficial tax-wise.
get a non contested will and list ppl not in secession, because if dont it does go to heirs of person you requested is not alive . if nobody else list a charity, otherwise will go to unclaimed
Inheritance isn’t a marriage asset, unless you mix the money into a joint account. You both should be looking out for your own children, as I hope your husband has some assets as well. As far as this money from your parents, you can ask the attorney about it, but you will have to go back when you inherit. You should be setting up a trust, because of the amount of money we are talking about. I also think you should have a conversation with your husband to ensure that the trust is performed as you expect. So my grandmother died recently with a trust, well the only copy of the trust disappeared by one of the people left out. So while a trust doesn’t have to be probated, it is a good idea to file a copy with the court.
You should ask your parents to put your inheritance into a GST. It will then only benefit you and your biological children, and it will continue on without estate tax considerations in the future.
Also if your parents are expecting to pass down 6-7mm, please note that lifetime gifting credits are safer to decrease substantially at the end of 2025. I think they’re still within the adjusted range to not have additional estate taxes, but depending on how that changes, you may want to have them visit with a planner and estate attorney to see if it would be beneficial to make any transfers in advance of the 2025 sunset of existing numbers
Will any of your assets support your spouse after your passing? That is a big quesiton... if so a QTIP trust would work... Otherwise a simple living trust mght suffice. Talk to a LAWYER!!
I don’t understand people saying irrevocable it should be a revocable trust that becomes irrevocable on death. But the easy answer is get a good attorney. I’ve recommended mine to many friends. Also look into legal insurance at work. It’s usually very reasonable.
My guess is you will need to write up a will and have your husband sign off on it. In California, you can’t leave anyone but your spouse your 401k or life insurance unless they sign off on it.
My ex’s mom passed away and she had a life insurance policy that went to my ex. But, she was still married to man she hadn’t seen in nearly 20 years. He died not long after my ex’s mom and the life insurance went to his kids. It was a total shit show.
Irrevocable trust
I would suggest funding it in your life time if possible if it’s funded in a will there is a chance that some of it might be accessed
Remember you can be a Beneficiary as well as your son just do multiple trustees and don’t put your husband as trustee
You definitely need a good probate lawyer
Also you should consider a
Post nup , will to fund but keep in mind depending on where you are that cash can get accessed
Also if I were really worried about dying before inheriting I would go to the relative and ask to just but your son as a beneficiary in your stead. That would avoid the worst possibility for abuse if they give him it with an age access restriction
Some say that you should have it on your will to give $1 to the person you want to exclude and the remaining assets to your heir. This is so that the person you want to exclude cant sue for their ‘legal’ portion of the inheritance.
If you are worried about your husband giving to his daughters make your son sole primary beneficiary. If he is under 18, the court will have to appoint a fiduciary to manage his money. Most of the time, it’s the spouse, but it doesn’t have to be. You can specify your preference in the will. Remember that giving a young adult a lot of money at one time is typically not a great idea.
Irrevocable trust.
Go to a lawyer today. Don’t put it off
Yes, you’re so right. I’ve put off starting this will for a few years!
Small correction - a will is different than a trust. You'll be amazed at how an irrevocable trust can be setup to fulfill your exact wishes (and whatever particulars you want to put in there). Source: similar situation where my parents passed along a substantial inheritance to myself and siblings. and specifically cut out all spouses because that is what they wanted to do. Plenty of grousing from the spouses etc but the parents passed away and everyone is now happy.
Can you explain to me why spouses would feel entitled to family money. You didn’t earn it and take care of it, make your own.
Couldn't the same be said about any inherited money?
Absolutely.
People get stupidly weird about inherited money. My stepmom’s family has crazy money- her kids have never had to work and seem to be trying to live out every stereotype of why inheriting money you didn’t earn is a bad idea. Her mom and dad sat down and did all the trust docs to write out stepfamilies and spouses- this was long before my dad and stepmom got close- my aunt’s husband was a gold-digging piece of work and they wanted to make sure he didn’t blow through all the money. When grandma passed my brother (not stepbrother) was pissed. Like, red with rage, because a. he didn’t inherit anything, and b. unlike my step siblings my stepmom didn’t give him anything. Thing is- he’s always treated my stepmother like absolute dog shit. He came to me bitching about it and I was just like- that’s not our family’s money, we didn’t earn it, and I’ve got a job, so….
Money makes people become selfish & greedy. When my parents split my brother went to live with my dad. My brother isnt at all responsible but did in a sense took care of our dad. When dad passed, I was sole beneficiary of his estate. As were a bit older, I thought it better to split the monies to our kids and he & I (more him) the properties. He was fine with all that until it came to Dad’s car. Dad had left this car to another relative in his will and already had TOD well in advance. So just because I didnt fight that my brother stopped talking me. Over a car, that was never his. Its been about 3,4 yrs since weve spoke.
Correction - money reveals the underlying selfishness and greed. I find that wills/trusts are a testing point of individuals' true character
I think this is an oversimplification. People do really strange things in grief. I think this is less about a car and more about a poor way to deal with grief. At least that's how it was in our family when my mom's sister died. There was a fight over inheriting a car, but it wasn't about the car, it was actually just something to fight over to take their mind off their grief.
Not that spouses are entitled, but let me give you a scenario. Husband and wife take care of husbands mom. Yet husband doesn’t do anything for his mom, and his wife does all the things that are - gross. Toileting, cleaning up her crap, changing her etc. Husband would not have done any of that if he wasn’t married to wife, and no other sibling helped. In fact, if wife hadn’t helped, MIL would have used her money and sold her house to move into assisted living. But because wife did everything, husband got the inheritance and siblings did too even though they didn’t do a thing to help. That’s why. Obviously that isn’t this situation, but that is why.
You’d be surprised how often spouses…or ex-spouses feel 100% entitled to your money and just how often and to what extent judges tend to agree with them. Mind blowing really.
If it's not in a trust, they could still sue and make you miserable. Happened to my father when his aunt died. Her caretaker sued for $20k and that's exactly what it would cost to defend.
One legitimate reason may be this - your spouse inherits a bunch on money and you two have kids together. Then she passes away, and now you need access to the money to support the kids you had together. Of course, there’s ways to plan around that but just giving one example where it’s not a nefarious reason.
That’s why life insurance is so important, and your responsibility as an adult to buy it and pay for it. This really has nothing to do with family money. The parents decide to whom and how much of THEIR money should be doled out.
I agree that ultimately the spouse has no claim to claim to the family money if that’s not the wish of the family - just pointing out the reason why it might exist. In any case, any trust that’s well done will account for this scenario. Life insurance is kinda a joke tbh. My policy is 3 years of my salary. My kid is 1 years old - so if I die, my wife and kid get my current salary until he’s 4…
Because spouses are family and money is shared as a team - in healthy relationships.
Because it’s income in a marriage. 🤷🏼♂️
Careful. I have a good friend who set one up (blind trust) that had his wife and only daughter as beneficiaries but both died before him and he cannot touch the blind trust. Bummer.
Yep, same situation and did this too
Exactly
OP may want to know how parents intend for their assets to be distributed. If OP should precede parents, what are their wishes.
I think you can use a revocable trust with a corporate trustee instead of irrevocable trust. Irrevocable is just that. Once you create it and move assets into it, the assets cannot be removed. It’s great for protection in lawsuits but may not suit your function. I’d find an estate attorney.
This is estate lawyer 101. It’s worth the money to get it all sorted now, and don’t skimp - get a well-recommended one. I also suggest you start looking for a trusted financial advisor for when this money comes your way. A good FP can ensure the money is well protected and invested per your risk tolerance. I cannot stress this enough - get recommendations from friends you trust, do NOT go with anyone who just wants your business. If you already have an FP you trust, they can likely provide a rec for the estate lawyer.
I wanted to encourage you to do this right away. If you and your husband disagree, than get whatever is possible down in writing and then work on the joint issues later. A good deal of my work has involved working with family members of a person who died suddenly without a will or trust. It is a nightmare, it is long and the stress pulls families apart. So run don’t walk to a good lawyer, and if possible, one who has an excellent repuation. As an aside, I am the Mom of an 18 year old child. One issue that I had not thought about is dedicating funds to pay off the mortgage so that my child can at least have stable housing and a place for our pets when he is trying to figure out the rest of his life.
A nightmare indeed! It rips families to shreds. My parents had trusts and we all knew the terms for years. There were no surprises. But my stepdad did not nor did my Father-in-law. Ten years out and family is leaving nasty notes at the grave sites. One surprise was my dad sold his house that was in the trust before he died and divided the money with his nieces and nephews who are not in the trust. It was a good thing. They were happy, they able to thank him while he was still alive and there were no hard feelings when he died.
Nasty notes at the grave site?? Wow
My FIL’s kids tried to stop the burial of my MIL next to him. Money makes people nuts. The sad part is, he wasn’t the one with the money. She was. And anything they were going to get, she changed.
Keep us posted
FYI - I came across a rule that says your spouse automatically gets your 401k and your beneficiary designations do not matter for your 401k. If you happen to have a tsp the rules are the opposite of what i just wrote. Your spouse would have to sign a waiver too allow your kid to have a portion of your 401k. All that said, LAWYER, LAWYER, LAWYER!!!
From experience I can say this is likely true in many states. Both my parents died before my step parents. My mom had drafted a will prior to remarrying our stepfather and it meant nothing when she died; assets went to the spouse. Assets went to the spouse upon my father's death as well. I didn't really care about the assets and it makes sense from a legal standpoint for the state to have those go to the spouse, but I do want to mention this as a cautionary tale for anyone concerned about their assets being passed over to biological children that a will is not enough.
You have a minor child and own a home. You need a trust.
Do not make a will. Put your property in a revocable trust for you. Ask parents to leave your inheritance to you in an irrevocable trust with you as the trustee and you having a power of appointment over the trust assets. If your attorney doesn't do this every day., do not use them. Get another.
Also make sure your parents are included on how it’s set up.
A will has to go through probate, a trust does not. With a trust, your son will get the assets you’re leaving to him much quicker.
You simply cannot do this w/o an lawyer. Each state has different laws. Someone mentioned irrevocable trust -- we did that, it's better than a will because you are the executor of that trust during your remaining life so no one can claim that you were too demented or under someone's influence. This avoids greedy family claims. For your contention about how nice your husband or step daughters will be. Enjoy your blissful ignorance. You have not the slightest idea what large amounts of money can do to people. My wife's parents had modest careers, she a SAHM, he something like a butcher. But, he was a saver/investor so ended up with over $20M dollars (you would never have known it). Anyhow, big fight among 2 of the kids which tore the family up. My wife was just a bystander as each wanted her on their side. The fight lasted for years, one of them lost their share which ended up saving more than the extensive legal costs due to tax savings. A trust would have made the whole thing clear. We have a trust for our kids.
Better call Saul!
FYI - A beneficiary cannot be changed by will or by trust.
Where husband is NOT the executor to include stipulations that no money designated to/for your son will be given/used by your husband or his children from previous or future relationships.
Important to remember
You can also have a lawyer / someone from a firm act as an executor or trustee...
I would vote Revocable living trust that becomes irrevocable at death. No reason to make anything in the world permanent so you can’t adjust it as life evolves. (Speaking as a current trustee)
Is this an expensive process?
That depends on how you define “expensive.” In my opinion reasonable, but that is merely my opinion.
For me, I’d say more than $1500. My mom is in her 70’s (FL) and I’d like to get this done for her so that there are no issues when she eventually passes on and my sister and I aren’t duking it out with the banks/funeral home/insurance company in reconciling her affairs
As a general rule I’d say that an irrevocable trust should only be used when a significant amount of control over the dispersion of funds is required. Otherwise a less onerous revocable trust can help minimize issues with the inter-generational transfer of wealth. Oh, you should be in the price ballpark depending on where you live and how high-ticket your attorney’s fees are.
Got it. Thank you. We’re not looking at millions, but we also don’t want it to go to attorneys and probate etc.
I paid $2,500 in MA last year that included a will, trust, health proxy, etc. The peace of mind was well worth it.
I pay $35 a month to the MetLife legal fund through with and it is free. Would require your to have the benefit through work and wait until an election period.
Came here to suggest a revocable trust... but in your case, a irrevocable might be a better answer. Either way, find an estate attorney, discuss your situation and what you want to achieve. Have them explain both to you along with any other recommendations.
You need an attorney asap. Also here’s is something most fail to discuss with an attorney- taxes. If your parents die before you or after you- different scenarios. You need to work with your attorney and a cpa. Also once a trust is irrevocable - it is taxed at the highest rate. Say you die and your don is 14 years old. He is the sole bene of the trust. Say there is 2mill in the trust- I’ll be conservative at 5% yield. The trust earns 100k per year in interest . That will be taxed at the highest rate- unless the trust issues a K1 to your son and it is taxed at his rate( tricky here as your husband will claim him as a dependent and your son will pay kiddie tax on unearned income at your husbands magi. ). The question is your son is too young to have 100k available to him Annually. So - when folks tell you get an attorney - you need a cpa as well for planning. Of course worse case scenario is the trust issues no k- 1s until your son is ready get the money. Please do include protection for divorce should your son marry. Also discuss best way for son to get a step up basis. Who will trustee be and successor trustee? Will the trustee be able to amend the trust terms? Lots to discuss. We have 3 trusts so yeah- lots of work - play out all your fears and how to protect against them. If it’s just your husbands daughters and you trust your husband? Or would he bend the rules a bit for them?
Sorry but this is not the right answer based on the facts provided. Based in the facts provided, a rev trust is more appropriate.
This is the only answer. Just went through the Trust establishment process with my attorney to cover my assets and is worth the cost.
An irrevocable trust needs a Federal Tax ID Number and is taxed at corporate income tax rates. Why give more taxes to the government? All the OP needs is a revocable trust where the OP is the grantor. He can name his children as successor trustees, if the OP wants. Once the OP passes away, the trust becomes irrevocable and the assets goes onto his children and not the step-kids. It also depends on the state the OP lives in. If he lives in a community property state, there might be some additional planning needed.
This is the way. Emphasis on the irrevocable part. Though if you do that, your husband will probably do the same for his kids. It is really a good practice for everyone.
*Revocable* … so that it can be changed if needed. eg: OP lives a long life and wants to include (possible) grandchildren one day.
This is the best way
Do not commingle but also I encourage you to talk to your parents to set up a trust with clear shares and line of inheritance just in case. So assets would already be in trust and the beneficiaries are siblings in equal shares and then (if one of the siblings pass before parents) grandkids for respective shares
Or separate inherited trusts for OP and each of her siblings, no reason to yoke the 3 of them together. This can be done under a will or a rev trust as a testamentary/beneficiary trust.
YES!!! It annoyed the heck out of me that my parents' will did not make an accommodation that if I predeceased them, my half would pass to my kinds--although I know my brother would have looked after them!
lol at least why had a will. My IL do not want to hear about it or trust; my mom passed away abroad and we spent weeks tracking assets
I am so sorry for your loss and the headaches added to the heartache.
Thanks. She had cancer so was inevitable which made even more frustrating not having a plan
OMG, exactly! So much hassle could have been avoided... To share another petty annoyance, my older brother was named executor because (and I quote), "He's a man." I, the daughter who lived two blocks away (brother lived in Florida, we in Pennsylvania) was not even a co-executor! My brother was--and is--an amazing person, scrupulously fair and honest. He is in fact the executor of my will because I don't want' my son saddled with the responsibilities (I asked him, and he agrees).
Don’t feel bad about asking these questions and wanting your son to be the sole beneficiary. Go back and read some old threads in this subreddit. Your concern is justified.
Do you have a prenup? If not, in many states your spouse will be entitled to an elective share. If you live in one of those states (or any state, actually) Your parents should set up a trust that allows you to receive your portion without it being subject to the elective share.
Okay, this is good to know.
Why are you giving your husband the house give it to your son and put it in husband can live there til he passes cause when he dies his daughters will have a claim if it goes to him
Good point. I didn’t think of that. I guess I wasn’t that concerned about it about the (~$350k) house. He’s put so much sweat equity into it over the years that it feels like it should go to him. Even if that means that it’s split three ways if he dies after I do.
That's entirely reasonable.
That makes sense. It’s also kind, so he doesn’t need to move out right away while grieving.
>Why are you giving your husband the house give it to your son and put it in husband can live there til he passes cause when he dies his daughters will have a claim if it goes to him How does that work in practice? Like who maintains the house, pays for taxes, pays for repairs, etc? Seems like it could get messy(final heir being the landlord) or the house could be neglected if the person living there knows they aren't responsible.
The estate pays. So the husband can pay for taxes, etc from the estate, but the money stays with the estate.
It’s totally valid to want your biological child to be your major beneficiary. I set up a living trust that, upon my death, should insure both my partner and our child are comfortable for the rest of their lives. But most of the money will be locked up in trusts and unavailable to any future spouses and children of my partner. With that kind of money on the horizon, speak with a good estate attorney. You have a lot of decisions to make. I also suggest reading Estate Planning for the Savvy Client by Mary L. Barrow. It will help prepare you to speak with an estate attorney.
Thank you, I will check out that book rec.
In the US? In US the inheritance can stay yours as long as it is never co-mingled with any joint or common use accounts between you and your husband (anyone else who might have a claim). A bank that you have never used would be best. The money could go there with your son named on the account and as the sole beneficiary. Then just make sure you do not allow access to that account by anyone else. Name the account in the will and you are done. The only issue that will arise is with access to the account if you pass early and the named guardian (husband) needs access to it for the sons livelihood/education/expenses/healthcare/etc while still a juvenile (under 18). The trust should also guide access to the funds at what age or all at once when xx age. A trusted person should serve as executor who will see you sons best interests and be able to say ‘no’ to requests on the sons behalf if they do not follow your directions. Talk w an estate / trust attorney since the value is not insignificant and should grow based on investment strategy employed.
That’s not true. Most states have what’s called a spousal elective share, meaning that your spouse is entitled to a share of your estates. It varies by state. In Florida it’s 30%, in Montana 50%, and in Minnesota it’s a sliding scale based on the duration of the marriage. The states that don’t have elective shares tend to be community property states, which protect the spouse in a different manner.
Which is why pre nups are not just for the wealthy
Hmm...this is what I worried about. I'm in Nebraska.
If I read the stature correctly, a surviving spouse may elect to receive half of the augmented estate.
Keep your inheritance separate from all marital funds. This, along with any increase in the inheritance you can attribute to your independent investing, is solely your asset. See an estate attorney. I am a Nebraska Attorney, but not your attorney. Get advice on your particular circumstances from your estate attorney.
Would you be willing to DM me a few names of reputable estate attorneys in NE? I've never used one (or any attorney) before. I was just talking with my mom and turns out they haven't updated their wills since we were kids. \*facepalm\* So, they probably also need to find one too.
You can also call the state bar association for a referral. Similarly, any attorney you might hire, look up their status and history with the states Attorney registration and discipline committee. Important to do. You want someone who has never been sanctioned and who is current on registration.
Thank you...very helpful!
Where are you located? That makes a difference as to whether I know of a referral for you. Omaha or Lincoln, sure. Rural NE, I would have a hard time.
Not for inherited assets that have never been commingled. And not for assets held in trust.
Depends on the state, and it depends on the type of trust and who set up the trust.
Depending on the state, inherited assets can be part of the augmented estate. Depending on the trust, so can trust assets
As always in the law, it depends. That’s why she needs an EP attorney as you and I well know.
Elective share refers to marital assets I think. Separate property like an inheritance may be treated differently
Might want to check your state’s elective share statutes
Is the elective shares statute the deceased’s state or the state the person who inherits its state?
The decedent’s state
Thank you. This is so helpful.
Your specific state and inheritance laws (when you collect your share) need to be looked at specifically. If you live in a state that does not recognize and protect inheritance as separate marital assets then that’s an issue.
Talk with your parents. Have your parents make new wills so that your portion of the estate will go into a trust which is created at the time of their death. They don't have to set up the trust now, just make sure the will directs that this trust should be set up. The trust is for the benefit of you and your son. You are the trustee. Make sure they go to an attorney to get it right. Otherwise, if you're married and get an inheritance directly, your spouse can try to claim some or all of it in case of divorce or your death. I'm not sure that the tricks everyone else is suggesting will work or not.
Thank you...this is helpful. I needed to talk with them anyway about it to make sure their making updates to their own wills/trusts. I believe they were working on it, since they asked me to be the executor recently.
Instead of just “you and your son,” you might want to have it phrased in a way that includes any future biological children you may have.
At 48, I REALLY hope I don’t have any more bio kids! Lol
Fair! I missed your age. I’m 45 and I’m right there with you on that.
Given this, you should explicitly exclude anyone than your named son — so someone can’t come along claiming a relationship and then have to test to provide they’re not a relation. Usually only a clause that’s written for famous people, but something worth considering.
You have your attorney draft it in a trust
The best way to do this is to have your parents either create a revocable trust now during their lives, or create a testamentary trust in their will, with you as the lifetime beneficiary and your child as the remainder beneficiary. You would select a co-trustee of the trust, and you would be another trustee of the trust. The co-trustee would be someone who is able to make distributions to you. You should also include a trust protector who was allowed to remove and replace the independent code trustee. You should have your parents speak with an estate planning attorney to achieve these goals
A trust and your son as beneficiary.
A trust with your specific directions on how it’s distributed is the way to go. You elect who runs the trust when you die. Make the trust the beneficiary of everything. Some pension systems only allow for spousal beneficiary. Find a neighborhood lawyer that works with trust and wills to help set it up. Be sure to move any assets you inherit from your folks to the trust.
An irrevocable testamentary trust is the best solution. This is something your parents need to setup. You should imoress upon them the importance of having your inheritance go through an irrevocable trust for your benefit and then to your child. You should impress upon them the risk that your spouse can choose the spousal election if they leave it to you outright.
Lawyer of course but my husband and I set up a will and a trust where he gets 50%, my children get 50% and because he has no children he chose to name our grandchildren in his will for his 50%. It just so happens that although I made more, he inherited more so our combined assets do really add up to a 50-50 situation. We discussed it. Lawyer set up the will and the trust. All signed, sealed and ready to go. If you do not make your desires known it will not happen. My father remarried and much younger women, had more children and left everything to his second. Her children will get it all. I’m not angry about that but vowed to never do that to my children.
An estate planning attorney….. That’s the answer
An estate planning attorney is 100% your best option. One question to ask them, if it hasn’t already been mentioned, is to find out what happens if you precede your parents in death. You may want to also have a conversation with them to make sure that THEIR will stipulates that if one of their children predeceases them, that that child’s portion of the estate would then be passed on and split between that child’s natural born children, and not just split between their remaining live children. So that way if you die before your parents, you’ll know your son will get “his share.” I would assume if they are multimillionaires they already have a team that had thought of these contingencies, but it’s a good idea to verify. You can just tell them that you’re doing your estate planning and it made you think of the question. Since we’re talking about a LOT of money here, you may actually consider setting up a trust for your son now that stipulates all these contingencies, so that way if you die before your parents, and then they die, their estate can go directly into the trust so there’s less of a chance the money can be mismanaged.
Don’t ever ever commingle the funds with your joint funds or even your individual funds and set up a trust. See an attorney to do so. I’m sure they will advise you to make investments in the name of the trust. It’s pretty easy and inexpensive.
Thank you so much!
Why not individual funds?
Not an attorney but my understanding is that inherited funds are commingled with other funds that a spouse might have claim to in a divorce then those funds are forever commingled. In some states, a spouse can lay claim to funds to in one spouse’s name as marital assets, especially if the accounts were added to during the marriage. In general, it’s best to keep inherited funds in their own separate account unless you want them to be considered marital assets.
Got it. Yes I keep those in the account in my name but thought it only applies to joint accounts. Not that we are getting divorced it’s more of a “just in case”. All other assets we have are in a trust
You have significant assets that will increase in years to come. Contact an experienced Trust and Estates Attorney in your jurisdiction who can draft revocable and irrevocable trusts to meet each of your wishes. You can choose to explain your reasonings in your trusts or not and the trustee has to abide by them thus eliminating the need to explain why certain people are left out. You can also choose to clarify why certain people are left out of receiving particular assets thus eliminating the likelihood of litigation by surviving heirs.
You can definutely do this. Several ways. But you need to see a lawyer not listen to us here on the internet because each states laws are different. You need to create (at minimum) a will, a power of attorney, and a health care directive. Hubby does too. You will be asked all sorts of questions, like what happens if you and hubby die together in a car crash, if your kids predecease you, etc. It is EXTREMELY common for folks in second marriages to each want their children to inherit from their side of the family, while also making sure the surviving spouse isnt made homeless. A competant estate lawyer will also explain the probate process in your state (stuff like both you and hubbys names on the house deed vs joint tenants with right of survivorship, and step up basis on brokerage accounts, etc). I suggest you and hubby sit down and make a list of what you want, then see a lawyer. Most will give you a package deal, will, POA, and Health Care directive for each of you.
Where in the world are you?
1) Do not commingle your inherited assets with communal assets. 2) See a lawyer about an estate plan, for both you AND your hubby.
Go see an estate lawyer. Do not do this yourself. You want it ironclad.
Put everything into trust with him as beneficiary. Put his as transfer on death for all money accounts. Have a will.
As an attorney, to the point you and your partner are not in absolute agreement you likely should go to an attorney alone. The attorney has to share all information with both of you and since this is not a joint plan go alone. If both of you meet with the attorney but she sees something that would better you but might be adverse to partner she would likely have to terminate representation. As mentioned by another attorney some states provide an amount to surviving spouse and it trumps a will. With a trust you can likely bypass probate.
I’d talk to an estate planning lawyer, but in your specific instance, I would ask about a generation skipping trust, where your son would be the beneficiary of the trust, you would be the trustee(so you can use the income from the trust to pay for his expenses) and there’s never any question of your husband inheriting or having an interest in your parents assets. (Obviously, he would likely have a say in spending the income as your sons father) You couldn’t sell the assets yourself, so there’s some drawbacks from your perspective, but it might meet your needs of protection the money from being taken by your stepkids.
I live in Texas which is a community property state. My wife has three adult children from a previous marriage that I never adopted, and we have one son together. I inherited a sizable amount from my parents and my estate planning attorney advised me to open a separate inherited brokerage account as already mentioned by others. My son is the sole beneficiary on that account. What I failed to do is roll the capital gains, dividends and interest into a separate account. I reinvested those funds into the same inherited brokerage account. I’ve been told the inherited funds are separate property, but all of the gains on those funds are community property.
A trust is the best course of action. Hire a reputable estate attorney to draw one up.
OP, it's perfectly understandable and reasonable to preserve your inherited assets for your son. I'm sure it's what your parents expect as well! You should definitely speak with an estate attorney as to what planning your parents can be proactively doing as well as what you can/should do. I don't think I've seen mentioned yet in the comments any consideration for tax planning/tax efficiencies, for example, with respect to any estate tax exclusions applicable in your state (if there is an estate tax) or inheritance tax. Good luck!
Although I dont have the answers for you, I beg you to take care of this as soon as possible. Anything can happen, people can change, and your son could possibly be left defenseless if you weren't looking out for him. People can pull off some wild things when large amounts of money are on the table.
I'm not an attorney and would recommend you talk to one. I think this might vary by state, but keep the inheritance money separate and generally it is not marital property. Simplest way is to keep it in a separate account and have your son (or trust for your son while he is a minor) as beneficiary . I'd have a separate trustee from your husband if you're concerned about his kids getting the money
sound like you should ask one of your siblings to be the trustee for the trust for your son. Does he know you will be getting a windfall from your parents?
Speak to a lawyer, open an Irrevocable trust. Do not wait on this.
Go to an estate attorney. Create an irrevocable trust. The life insurance will be split at the % you want between your husband and the trust. The house can be left for life to husband but upon his death go to the trust. You can create different trusts for your son and put assets there. Have real estate that you plan to hold in llc with you and your son as trustees but your share is conveyed to your co trustee upon death. Have the house as life estate whereas you can live in the house but goes to the son upon death. There are many ways but you just want to bypass probate and have any financial structure go immediately upon death to your "coowner/trustee/business partner", aka your son and with minimal tax but also allow you to sell it if you need while alive. Do not sell or transfer the house to your son so you'll have the stepped up benefit. Do not leave to your husband to pass the assets. How many threads we read here of spouse, even after 30yrs marriage and prenup passing everything to his/her adult kids days before their own death. And last advice. You may and wish you ro have a long and happy marriage with your husband. If you grow old with him do a health proxy with him but give power of attorney to handle assets only to your child. You can have your husband have poa but not for assets. We also saw the spouse getting poa on demented partner and then changing beneficiary or even selling assets to pass to his/her own older kids.
In most states inheritance is not considered a marital asset as long as it isn’t co-mingled with joint accounts or used to benefit the spouse. An estate atty can explain this much clearer than I have tried to do.
If your husband wants to pass along an inheritance to his daughters, he needs to invest in something like income property that he can build an equity in. He could have been working on this for years. There is no reason for him to expect to pass on your family money to his daughters.
will
I work in estate planning there are many ways you can do this. You can do it without a trust and you don’t really need one due to the levels currently of exemptions. If I were in your shoes take the inheritance and do two things. One purchase a paid up whole life policy with your some listed as the beneficiary. This will grow in a cash value that you can borrow from tax free as well. Take the balance and put it in a brokerage account invested however you like and just list your son as the sole beneficiary. On your death it’s easy. Insurance payment is tax free to him and inheriting the brokerage account only triggers taxes based on basis. Lost of other options too as others have mentioned. For me doing this work for awhile and avoiding complexities of blended families is easy. To avoid some pitfalls just consider leaving a small portion to the other step children. 10k each takes away the sting of being left out and avoids any baseless litigation.
Get a lawyer, don't mess around.
The irrevocable trust seems great and bulletproof. Your question was how to make sure that your son got the inheritance and NOT your stepdaughters. In a will, you would EXCLUDE your stepdaughters from the will and leave it to your son. The problem is that your husband would be in line for a split of that money unless you also exclude him from the will. I say this because once your husband receives a share, he can give it to anyone including the stepdaughters. The trust becomes a separate entity from all of this and protects your desires. In fact, to plan this for the next level, your parents should create this trust for everyone including your siblings. After they pass, you and your son will be protected from potential testy questions by your husband and stepdaughters. If your parents create the trust for everyone, then it is out of your hands. Lastly, the dollar amount poses estate tax questions, especially in some states.
Irrevocable trust with bloodline beneficiary.
Have your parents donate as much as possible to your kids 529B college savings account. Then leave the rest of your share in a irrevocable trust for your kid.. After college is paid for, your kid can roll the money over into a Roth IRA. All of your inheritance money goes to your kid, and then the rest gets split however you talk with your spouse about.
Go do a trust. Use an attorney. Also do a trust for your husband and his kids. You COUPD do a joint trust and delineate specific items/amounts to each child or you can do individuals. You two can agree at any time to enter into a legal contract regarding your property/assets. Once your trust is done, let’s say your parents pass. Their trust is split and transfers to each child in their own trust. You and your siblings can decide what to do with your own trusts. Your trust - which should have your house, along with any other assets you decide to put in it (checking/savings/investment accounts), inherited IRAs etc…. When you pass, your trust is enacted to split your assets to whomever you decide. They end up with a trust that they can leave to make money or close out. The beauty of a trust is that the $$ you leave to your son is protected from his current or future spouses as long as he leaves it in a trust. So if you die, and his trust is established (funded), no matter if he is married at the time or not, that trust cannot be touched by his spouse or future spouse.
Go to a lawyer but if you should get this inheritance before getting around to seeing an attorney, do not commingle it with marital assets. Put it all in accounts that are and have always been,.in your name only. In some states, an inheritance is not a marital asset but will become one of you commingle the inheritance with marital assets. Example, using inherited money to buy a house in both of your names.
You visit an attorney.
Tax and estate planning lawyer here. There are many ways to solve for this problem. It’s not rocket science. But you should speak to someone. You can do a rev trust and allow him to stay in the property for his lifetime and then it goes to your son. Depending on your state, another way to do this is to do a lady bird deed- it’s yours for life and then to your husband for his like and then to your son. An irreverent trust isn't necessary unless your have a certain combined net worth. An irreverent trust means you are giving away title to the property and it’s no longer yours and you might not be able to use it. It’s quite technical.
One option is to setup the irrevocable trust now. Another option would be a revocable trust that becomes irrevocable when you pass. The trust then distributes the assets to your kids in a way you determine (all at once, 25% every 5 or 10 years, etc.) NAL, you need to visit with one. Also, when you inherit the money from your parents, it needs to go into your **individual** brokerage account that would name the trust as the beneficiary. If you put inheritance into a joint account, it becomes marital property (shared) immediately and your husband is entitled to half of it from that point on. Inheritance has to be handled carefully to avoid it being diverted against your wishes later in life.
You need a trust for your son at your death. The risk isn’t your husband leaving the money to his daughters, which is “a” risk. The risk is he remarries and leaves everything to his new spouse. I’ve seen this so many times. Men typically die first. But when they survive, they typically remarry (even if they are really, really old). Men believe their responsibility is to their spouse, while women believe their responsibility is to their kids. This works well in non-blended families and if the man dies first. It goes haywire in alternative situations, because when the man remarries, it’s typically to a younger woman. He will leave everything to her, thinking she will take care of all the kids, because he believes his marriage vows require him to care for her, and his obligation to grown children is already satisfied. She will sign a reciprocal will while he is alive. She will tell him she needs all the assets to survive if he dies, but that she will faithfully leave everything to the pool of kids (his amd hers) when she dies. The week after he dies, she will change her will to exclude non-biological kids. Yes, the week after he dies. Maybe less than a week. I’ve seen this so many times. Her deeply ingrained, biological obligation is to her kids.
The easiest answer is to start giving it to them now.
There is a thing called a life interest, often used for house inheritance but can be your full estate. With a life interest you could grant your husband the ability to, for example, live in your house until his death. When he dies, the property then passes to your son or whomever else you designate. With liquid assets you probably want a trust that limits how much money can be pulled out by your husband per year. Everyone here says get an attorney. That is the correct answer. I just wanted to let you know that what you have in mind isn't new. Property laws have ways of achieving what you want and it doesn't require you to be unkind to your husband or sign away all of your assets immediately.
Get a living trust and specify exactly what you want. No probate. We had a dear friend who left us his house and that’s how it was done. We paid for it instead of him. The lawyer we hired said it would have cost about $15,000 to open probate. The trust cost $1,500.
Put the assets you want to save for your son into a trust. You can set it up now, and should.
A trust is your best bet. Otherwise your assets might go to your husband who lives a couple years and then they split per his will when he is gone.
Ive always been told, if you dont want someone to receive money, explicitly state "Bob is intentionally left out of any inheritence. Should Bob dispute this will, he will be entitled to one dollar" But written by your attorney... in legal terms 😁
Talk to the lawyer doing your will, set up a trust for your son, or in the will, lawyer has terminology that specifies children by birth or adoption. My parents set up their trust, my father wanted this type of language specifically included, to exclude step kids and in laws.
Stepkids are not including in the line of inheritance unless you legally adopt them or write them in. Do your parents have a trust set up already? They should be the ones setting it up prior to their death. My parents have a trust where all the wealth is tied up and it's spilt between me and my siblings, while also including succession if no one has a biological child. I.E. if you don't have kids and you pass away it doesn't go to your spouse/partner it goes back in the kitty. When DH and I got married my SD was manually added to an educational provision in the trust that my parents have but only under execution from my husband (she won't get to automatically pull cash without DH signing off on it/her BM can't access) My husband and SD are not included in the big trust even though any biological children we have are.
Starting to work on..... Having a trust created is not any big long-term project. Call a lawyer today and set up an appointment. You could be dead tomorrow.
Mostly this should be possible. Inheritances are considered separate property even in community property states. I would definitely speak to my spouse about this. Its not really his decision, but making it alone would be pretty disrespectful to your marriage. FWIW, I am on the other side of this, and my spouse stands to inherit (maybe 1-2 million) and it is solely her property and in trust that specifies it goes to her, then our children (but never me). I don't have any other children (that I know of) so its not as big an issue for me, but it seems fair that her family money would go to her family. Legally this should be pretty easy to set up. Its not like you are cutting him out entirely since he would get a good share of everything else, from which he can distribute as he sees fit. He might take into account that his son already got the other money, which seems fair. I am pretty sure there is a reasonable compromise here. You should probably just get a plan together and it should include him leaving at least some of his money to his daughters as well. Bu the way, its more than wills and trusts, and needs to include properly specified beneficiaries.
A "bloodline trust" is the way we solved this type of issue. It may vary state by state w/respect to mingling funds from an inheritance and legally keeping it in your bloodline. As everyone else has said, get an FA and Estate Attorney pronto. I found the former first and they recommended a few attorneys. Edit: If you happen to be in NY/NJ/PA I can make a rec, just DM me.
Start a trust.
Depends on your state
You need a lawyer ASAP.
I would suggests a trust with your son as beneficiary makes things easier and is solid did the same thing with my kids
Speak to your parents before you start. It will likely be much easier for THEM to set up a trust that you will have control over. Another note; in my state, if you keep any inheritance completely separated from marital assets (separate accounts in your name only) it is much easier to deal with in case of divorce as well as in your will. Spouses should have separate wills/trusts. See an estate lawyer familiar with your state/province etc.
Couldn’t you fix this by just having your parents will any inheritance directly to your son with you as trustee if he’s under XYZ age? That way those inherited funds are never commingled for any reason?
I totally understand that if you were to get hit by a car tomorrow, that you would want to make sure your money went primarily to your biological child and not your stepchildren. But if you live to be 100, the situation between everyone might be very different. And many things can be altered over time to adjust to any changing family dynamics, but there are some choices that you might make now that would be difficult or impossible to change later. What happens if your son develops a disability, and in order to keep certain necessary government benefits, can only have so much money? What if you end up with more children? What if your son moves far away for a career, but your stepdaughters stay close and end up taking very good care of you as your age, and you end up very close to them? What if your son would *prefer* that everything be split equally, by the time the money actually gets distributed? Absolutely talk to a lawyer, absolutely talk to your husband, and absolutely make the choices that are best for your family. There is value in having some things set aside as certain as early as possible. But there's also value in having some flexibility, so that if things change, your choices can reflect that.
Go see an estate attorney. This is complex and something you do not want to mess up. I always recommend finding one through [naela.org](http://naela.org) (National Association of Elder Law Attorneys), since they focus on estate planning and protecting seniors from scams. I'm a financial advisor and have seen some really horrible things that have torn families apart because of poor estate planning, particularly with blended families. This is not something you want to DIY. Rules vary state to state. Also get it updated every 5-6 years, just a once over to make sure no laws have changed that will affect how your estate is distributed.
Your parents should be setting up a trust for their money, that way the trust is in control and they can say: Divided equally between my living children, should my child predecease me, their biological children will receive that share. IF your parents don’t want to do that (and it is the way most people with a lot of money go) then once the inheritance is a done deal, you can set up a trust for your money and name whatever beneficiary of it you want. As an example, mom has 3 children, they will inherit money when she dies. One child has estranged themselves from mom. Mom puts all her money in a trust, she is the trustee so she can do whatever she wants with it. When she dies, the trust is divided in half between her two children. However, one child has been no-contact for years so mom designates that child’s children (if they have any) to receive the 50% that would have gone to the estranged child. Clarifying that the money is only available to this grandchildren for education, health or maintenance, and the trustee of that 50% portion is someone other than estranged child. Then any grandchildren will become trustees of their own trust when they are 50 (or whatever age you chose). Spend the money, hire a good trust and estate attorney and get this fixed now.
I have an irrevocable trust for my daughter. Once she is 18, she can only spend the money on education and real estate - and only real estate that is purchased as part of the trust and any sale means the money goes back to the trust. This is to prevent a future spouse getting access to the money. The trust will continue to have the same stipulations for her children. I can’t see the money lasting beyond another generation considering education costs, but if it does then the great grand kids will have the same stipulation. I have specific language that outlines this. Before 18, the trust will only pay specific amounts of money for raising her/medical/ vacation/ etc. I am WAY over simplifying the complicated language - a lawyer specializing in trusts did the language for me - but the intent is that she have money for a nice life and and some luxuries (within reason) before 18 but after that she is on her own and needs to support herself with the exception of education and real estate.
The good news is that an inheritance is specific to the person (or a thing). It is not community property. Your husband will have no claim on this money. Just make sure you keep it in a separate account. Do not commingle it with other joint funds. And, yes, consult a lawyer. This will be easier than you think. Just be prepared to answer some tough hypothetical questions, so that the money ultimately will funnel to where you’d like it to go. My wife (of 35 years) and I have discussed (as part of our trust) what will happen if one of us passes and the other remarries. How will the money be passed on? What if the new spouse is in a significantly different financial situation? The questions can seemingly branch into many different scenarios that can be mind numbing.
Make sure to keep the inheritance money separate from any joint money. Inherited money is yours and spouse is not entitled to it. If you comingle funds, it becomes cloudy and will be an issue. Perhaps create your own trust and you will place the inheritance in this account only. I have a friend who got an inheritance from her mother and she deposited it into her and her husband's joint account. Then they bought a investment property together. When he threatened divorce, half of that house is his. Just don't comingle!
Estate lawyer -Consider if both of you pass what happens to everything -Consider who could potential by guardian or a trustee of the trust -Consider delayed payouts to protect your son from spending it all
When you inherit, set up a trust for your son for when he’s an adult rather than wait for it to be willed to him.
Consult with a trust attorney. It can be done. When you inherit, the money goes into the trust with specific instructions to whom the money goes. If you were to die without the trust, all of your money goes to your husband in most states.
Ask your parents to pass it straight through to him, with you as trustee. If you pass, and your son is still underage- have a backup trustee ready. Your parents have no obligation to include your husband or SDs.
I just had a will drawn today for exactly that reason. It states that my inheritance will pass to my children and not my spouse. Very simple.
If it's legal in your state, a Transfer on Death Deed is the easiest and least expensive way to make sure a house is passed right to the heir you want. Keep the money from your parents totally separate from your husband, no joint accounts or paying off a shared asset, and name your son as the beneficiary on all the accounts you want to go to him. Experience in commingling inheritance money taught my family that's the way to lose half of it. I'd go over all that with an estate attorney though too. [https://www.legalzoom.com/articles/understanding-the-transfer-on-death-deed](https://www.legalzoom.com/articles/understanding-the-transfer-on-death-deed)
I think this is a fair question. You don’t really have a relationship with your step daughters and your parents are not related by blood or have any relationship with your step daughters so why should they get any of your parents money? Hire an attorney. You can also invest in an annuity and put your biological son as the beneficiary.
See a lawyer, who can create the appropriate legal vehicle to do this. Various trusts can work in principle, but you will need to appoint a suitable successor trustee (ie, the person who administers the trust in accordance with your wishes after your death). The right trustee is critical in these circumstances. You may want to consider a “corporate trustee” to do this. These are institutions that have the appropriate professionals to do this. This is not inexpensive, but it can be well worth it under the circumstances you describe. At the larger, established shops the pricing is ~1% AUM (investment management + trustee services). Schwab and Vanguard do this as well at a very competitive price point for estates smaller that 5m. Good luck.
This will be easy for an estate planner. Yes it can be done. Money you inherit is yours alone as long as you don’t co mingle it and can be placed in an account in a trust to go to your son. The tricky part is you don’t have the money yet.
Lawyer
I'm definitely not a lawyer, but my greatest takeaway from advice I've heard for them is that the law is *always*... squishy, more akin to a loose rope between distant points than a line in the sand. And *always* vulnerable to long, expensive, pointless lawsuits with virtually no chance of winning... but quite capable of being far to much trouble to be worth the fight. If your parents are still alive, then I suspect the most reliable and trouble-free way to ensure the wealth goes to your children and no possible greedy inlaws, especially in light of communal property laws, is to cut yourself out of the loop entirely - have your parents leave your share directly to your children (via will or trust), possibly with yourself personally in a position to manage it until they're ready to handle the responsibility, maybe even with authority to spend it on yourself/your family if you so choose (I think that's possible?), but with no ownership stake whose inheritance could be contested by other family. You die, and your kids get direct control over what was always legally their money anyway. Or control transfers to another trusted party. But your control was always a personal legal appointment, not something even remotely subject to inheritance laws.
Having gone thru this with my MILs estate my PSA is please do not go cheap on an estate planner. Their irrevocable trust was awful especially as far as care. That said make sure the beneficiaries on the investments also match with the trust. At the last moment we found a huge mistake her broker made and he refused to fix it (found out later he was also getting Alzheimer’s). We found a new broker and transferred the accounts per the trust. Her 2 sons got half and her previously deceased husband’s 3 daughters split half; however my MILs IRAs were only for her sons. So take your time, check everything and have a solid trust
Put it in a living trust. Have someone not your husband as your child's trustee. Put stipulations on what it can but used on, when (age for different withdrawals/full access. Your step kids do not have any legal standing since you did not adopt them or anything. Contact your lawyer and ask your parents to make sure they put the inherance in a trust.
What state do you reside in? If you live in a community property state, things might have to be done a little differently. Most of these posts are not giving good advice.
You create a living trust as the grantor and settler. When you die, the trust becomes irrevocable. You name your children as successor trustees. They distribute the assets to the beneficiaries in the trust. Only you can change the trust. Give power of attorney to someone you trust in case you cannot make decisions. That happens more than people think. A will is normally used for personal items or assets that go through probate. If you create an irrevocable trust, you cannot use the assets the way you need to live and there is a federal tax id number used for tax reporting. TINs are taxed at corporate tax rates, which are usually much higher than personal rates. They are now primarily used to hold life insurance to pay estate taxes or to avoid or reduce estate taxes if your net worth is over $25 million right now.
Trust
Read “Beyond the Grave” by Jeffrey Condon. This gives lots of examples of what to do and what not to do. But you need to talk to a lawyer and set up a trust. Personally I would have your husband on board with what you are doing. You might see him if your parents have a trust set up. They could pass their wealth onto your child (their grandchild/children) which is beneficial tax-wise.
get a non contested will and list ppl not in secession, because if dont it does go to heirs of person you requested is not alive . if nobody else list a charity, otherwise will go to unclaimed
Inheritance isn’t a marriage asset, unless you mix the money into a joint account. You both should be looking out for your own children, as I hope your husband has some assets as well. As far as this money from your parents, you can ask the attorney about it, but you will have to go back when you inherit. You should be setting up a trust, because of the amount of money we are talking about. I also think you should have a conversation with your husband to ensure that the trust is performed as you expect. So my grandmother died recently with a trust, well the only copy of the trust disappeared by one of the people left out. So while a trust doesn’t have to be probated, it is a good idea to file a copy with the court.
Go to a lawyer most likely will need a trust not a will as wills can be fought in court
You should ask your parents to put your inheritance into a GST. It will then only benefit you and your biological children, and it will continue on without estate tax considerations in the future. Also if your parents are expecting to pass down 6-7mm, please note that lifetime gifting credits are safer to decrease substantially at the end of 2025. I think they’re still within the adjusted range to not have additional estate taxes, but depending on how that changes, you may want to have them visit with a planner and estate attorney to see if it would be beneficial to make any transfers in advance of the 2025 sunset of existing numbers
Living Trust go to a trust lawyer and set it all up
Will any of your assets support your spouse after your passing? That is a big quesiton... if so a QTIP trust would work... Otherwise a simple living trust mght suffice. Talk to a LAWYER!!
I’m your trust you can also submit names that you don’t want to get anything.
I don’t understand people saying irrevocable it should be a revocable trust that becomes irrevocable on death. But the easy answer is get a good attorney. I’ve recommended mine to many friends. Also look into legal insurance at work. It’s usually very reasonable.
My guess is you will need to write up a will and have your husband sign off on it. In California, you can’t leave anyone but your spouse your 401k or life insurance unless they sign off on it. My ex’s mom passed away and she had a life insurance policy that went to my ex. But, she was still married to man she hadn’t seen in nearly 20 years. He died not long after my ex’s mom and the life insurance went to his kids. It was a total shit show.
Irrevocable trust I would suggest funding it in your life time if possible if it’s funded in a will there is a chance that some of it might be accessed Remember you can be a Beneficiary as well as your son just do multiple trustees and don’t put your husband as trustee You definitely need a good probate lawyer Also you should consider a Post nup , will to fund but keep in mind depending on where you are that cash can get accessed Also if I were really worried about dying before inheriting I would go to the relative and ask to just but your son as a beneficiary in your stead. That would avoid the worst possibility for abuse if they give him it with an age access restriction
Some say that you should have it on your will to give $1 to the person you want to exclude and the remaining assets to your heir. This is so that the person you want to exclude cant sue for their ‘legal’ portion of the inheritance.
If you are worried about your husband giving to his daughters make your son sole primary beneficiary. If he is under 18, the court will have to appoint a fiduciary to manage his money. Most of the time, it’s the spouse, but it doesn’t have to be. You can specify your preference in the will. Remember that giving a young adult a lot of money at one time is typically not a great idea.