I’m 74 and want to create a family educational trust for current and future generations. This is stated in my will and what assets will and/or should be used. I want a number of restrictions in the trust like only 90% of the income can be used so the trust will grow over time. If more than one child qualifies in a year they share. If no one goes to school that year the money can be used to help pay off student loans. If child fails a class they must take it over at their own cost and pass.
I want to form the trust now since I have grandchildren in college, but my lawyer keeps coming up with reasons not to. My concern is the trust won’t get done at all or not the way I want after I’m gone. I have seen far too many cases where the deceased’s wishes were not honored and I have seen money squandered in my own family. I feel my life’s work and dream of all descendent having access to a college education is too important to leave to chance.
Is my lawyer’s reluctance to draw up the trust justified or does he just not want to tell me it can’t be done? Should I find another lawyer? Would appreciate your input?
You are planning for your grandchildren’s future and add terms so they don’t take the money and sit on their laurels during their college years. That seems generous, thoughtful and fair. I recently wrote about a mother who asked: How do you overcome generations of poverty? Read together as a family (books), discuss the news events of the day (be informed), visit a library more than once a week (more books) and start saving small amounts of money (prepare for a time when your child’s opportunity for further education). Another letter writer who earns $15 per hour wondered what to do with a $150,000 inheritance. I urged her to think about further education.
Your grandchildren don’t need to break a cycle of poverty. They are merely being offered a helping hand to speed the plow. What disturbs me most about your letter: Your lawyer doesn’t appear to have given you any solid reasons for rejecting your wishes to set up a trust. Is it because he believes it will count against financial aid? If so, he should clearly state his case and you should weigh the pros and cons of that. Trust funds do not shelter money against the financial aid process. You want to put a college education — one of the most important and expensive ways to achieve the American Dream — as the No. 1 goal in life.
One theory for your lawyer’s reluctance to set up a trust: He or she might not be an expert in the complexities of such trusts and, rather than lose your business, is trying to steer you to a solution he or she does understand. A good trust should strike a balance between specific requests and general circumstances to it can adapt to changing and unforeseen circumstances. “It’s tough to find a trustee who will properly administer this type of trust without a specific dollar amount,” says Rob Marquat, senior vice president at People’s United Wealth Management. If it is a modest amount, your lawyer may have a challenge filing the tax returns. “This could be one of the reasons the attorney is shying away from getting this done,” he says.
The members of the Facebook Group for this column almost unanimously suggest you get a second opinion — and I’m with them. One member writes: “Though you seem to be punishing the kids who happen to go to college at the same time (have to share). Maybe a conversation with a college financial aid specialist could help you think through and simplify the scenarios. What about the kids in college now? Are you going to help them if you don’t do the trust right away?” She raises a good point. For a grandchild that is not academically inclined, is there some alternative plan that could help support him/her in his life? These are questions an estates and trusts attorney, along with trusted family members, can help you grapple with.
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Hello there, MarketWatchers. Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas: inheritance, wills, divorce, tipping, gifting. I often talk to lawyers, accountants, financial advisers and other experts, in addition to offering my own thoughts. I receive more letters than I could ever answer, so I’ll be bringing all of that guidance — including some you might not see in these columns — to this group. Post your questions, tell me what you want to know more about, or weigh in on the latest Moneyist columns.
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