I’m 65. At this point in my life, I have about $1mm in investments,and own my farm outright. No debt. I’m single, no kids. I have nieces and nephews, most are in their 30’s and 40’s. Some of those nieces and nephews have kids, some don’t. I have 2 living sibs.
Now, I’m not leaving my estate to my sisters. 1 doesn’t need it, 1 would probably spend it down in a couple years. I have 8 living nieces and nephews. I have, in the past, promised one niece my paid-for farm on the condition she cares for my pets for the rest of their lives. She’s really the only one I’d trust with my pets. So far I have 9 great nieces and nephews, the progeny of 4 of my nieces and nephews. With my nieces and nephews, those that need the money need it because they’re lazy, hypochondriacs and bad with money. If I will it to them, it’ll be thrown down the drain. Those that don’t need money are diligent, hard-working and sensible. And don’t really need it, although I’m sure they wouldn’t say no.
I could set up some sort of educational trust for the greats - realistically I could put most of them through college on the annual disbursement given their age spread and investment gains. I could allow a disbursement at 25 for those that aren’t college-bound, which would give them a leg up on adult life. This would end up probably leaving the principal mostly untouched. But if I leave everything to the greats, that seems unfair to the child-free nieces and nephews.
I’m not unhappy with any of them. No one’s on drugs (that I know of) or in jail. Some are smarter and harder working than others, but none are bad people. I’m just in the enviable position to have enough money to make like easier for some, and can’t figure out the best way to do it.
Or I could end up in long-term care for years and spend it all on myself. Or donate it to charities.
You might be able to set things up with a trust fund that specifies that the administrator would only distribute to those kids who have the GPA to stay in school or to those who attend a trade school. But honestly, you won’t know what goes on when you’re dead. If your childless nieces/nephews suddenly start selling arms to the Taliban after you’re dead, it won’t make any difference to you. All you can do is set something up that is fair and equitable, and cut out those who you know are not worthy of your generosity. It’s what we did in our wills.
Wow, leaving a farm to somebody on the condition that she care for your animals seems generous. Unless, of course, your ‘pets’ amount to herd of dairy cattle or something like that!
What my in-laws have done is bypassed my wife and me (and my BIL, too) and left most of their estate to their grandkids. My MIL had a discussion with us several years ago, noting that we were in a position not to need much, so they’re leaving us with basically a token inheritance, while each of the grandkids stands to inherit seven figures at least. We are ok with that. My AH BIL probably is not, but I think he’s the main reason he and my wife are getting bypassed by the gravy train in the first place.
Your situation is harder, because you’ve promised something of value to one, but made no promises to the others. They may feel hard done by when it’s time to divvy up the estate. One way to do it is to leave one-seventh of your estate to each descendant ‘branch’, for each of the nieces and nephews other than the future farmer. The ones you think may not need it you can give it to them outright to do as they please. The lazy hypochondriacs’ shares you could put into the educational trusts as you describe for their kids, so the lazy hypochondriacs don’t get their mitts on it but you’ll be encouraging education and grown for the next gen. And include a provision that anybody who contests the division will automatically be cut out and their share, if any, will be distributed to the other heirs.
Think long and hard, once you’re made up your mind, about sharing your plans with them while you can. Some of them may not like it, but at least it’ll be known ahead of time and it could reduce the discord after you’re gone.
The last thing that comes to mind is you’ll have to be very prudent when you choose who will administer your estate.
OR…if you REALLY want to be remembered, send them to a remote, desert island and have them compete for it, Survivor-style. Winner take all! You will definitely be remembered. Probably not fondly, but you may resonate for generations.
I worked for probate court during my time as a judge’s assistant for several years as part of my civil assignment, and also worked as a paralegal for estate planning attorneys for a couple of years. I won’t give you legal advice, obviously, as I’m not qualified to do that. But as someone who observed many adverse situations arising out of estate situations, here’s the best advice I can give you:
Don’t try to control things too much from beyond the grave. Keep it simple, and don’t place too many conditions on inheritances. Decide how you want to distribute things, tell everyone in advance so there can be no misunderstandings after you’re gone, then stick with what you say.
The estate administrations I observed that went best with the least amount of family disharmony were when the estate was converted to cash and essentially divided equally. You could put a condition in there that your pet-caring niece has the right to live on your farm until the last pet has passed on. But I agree with @ricepad that giving away the farm – quite literally, in your case! – in exchange for pet care is likely to cause hard feelings among other family members. Do you really want to set them all against each other? People often squander inheritances by suing each other in court. That’s just sad.
If you feel very strongly about not leaving anything to those who aren’t “deserving”, maybe it’s best to just leave it all to worthy charities. That’s what I’m doing. They’ll curse your memory – but maybe they’ll all at least get along.
There’s no one who isn’t “deserving”, or who I’d disinherit completely. However, I’d be more tempted to have an on-going trust and let the nieces and nephews split a 5% distribution each year. That way no one can do something really stupid, but it would be a nice little $6K Christmas present they could look forward to. Something to cover that bad thing that always seems to come up - a car accident, help with a furnace or appliances, etc. The principal would keep churning away. If they wanted to save it up for their children’s education, that would be great. However, in the future as the nieces and nephews age and die, what happens to the trust? Does it all get given to a charity? If it goes to the next generation, is it equal splits? It’ll never be a huge amount of money, but enough that it can help along the way.
As for the farm, once the last horse dies, I may well downsize to a place with just a couple of acres for the dogs. As it is, I’m leasing 6 acres to the neighbor to run cattle on, for a pittance and all the beef I want. If that happens, I don’t know if my niece will get whatever house I own at the time. Right now I have 6 dogs, a cat and a couple barn cats. If I could find a rescue to guarantee to take the pets (with a generous donation for their care, of course), I’d do that, and have the house sold and the proceeds added to the trust.
Also, if you expect someone to act as a trust administrator to distribute the proceeds, they might expect to be paid for that work. That’s money that’s not going to your heirs, so that’s a reason not to over-complicate things. Just distribute the money in as simple a system as possible.
I’ve been going through this process after seeing how complicated it was for someone else who died without some things in place. For one thing, 95% of my assets are in banks or investment accounts so I’ve been trying to set up the beneficiaries for those accounts through the companies. That avoids the whole probate process. I also plan to establish a beneficiary for my car. I don’t own real estate but if I did, I’d do the same thing there. That only leaves household goods.
Now that my kid is 13, we’re finally doing something about this. After a consultation meeting with the lawyer what we’ve discovered is complicated trusts are expensive. It was going to be $10,000 to setup a trust for my kid with slow and need based payouts over time. We can save a third of that by just doing a few simple time based releases of money.
My recommendation is to just divide equally among the grand- nieces and nephews. Or, divide equally among the all of the nieces, nephews, and grands. If any of them are still minors, then you might need to get a little more complicated. Perhaps an education trust available for college, and then the balance released at 25.
One sib can get the farm instead of their share. That won’t be “even”, but if nobody else cares or wants the farm, then it isn’t a problem. If anyone complains about fairness, just respond with simplicity and not wanting to force sale of the farm.
However, you can write the will/trust so that if you do sell the farm while you’re alive, that reinstates that sib’s share.
First and foremost, you should do with your money that will bring you the most enjoyment and satisfaction. It sounds like you’re not all that interested in just giving your relatives money - there’s absolutely nothing wrong with that. It also seems that even if you did want that, there are enough of them that we’re soon talking about some pretty thin slices of pie.
My recommendation is setting up a Donor Advised Fund for any or all of them. A DAF gives them a sum of money to be stewards of, and each year they are required to give a minimum percentage of the funds to the charity or charities of their choice. If they’re not interested in the long term philanthropy of it, they can donate it all at once. Or they can use the opportunity to find organizations that have meaning to them and build a philanthropic relationship with them.
Keep in mind your expenses during the final years of your life. If you move into a “home” --ie. a facility for assisted living, it’s going to eat half of your million in 4 years..
Typical cost is a one-time payment of about $250,000 “buy-in” fee, plus about $5,000 a month rent. This is for a private apartment in a building with all meals provided in a cafeteria, and staff on hand for personal assistance.
You might want to shop around. About 10 years ago, my wife and I paid around $3500 (we are in California, if that matters) with an attorney whose firm specializes in trusts. One of the things that sold us on him is that he offers the opportunity to update the trust annually, and that’s included in the upfront price. If we wanted to make changes more frequently, we’d have to pay, but in the last 10 years, I think we’ve only made one change. His office also sends us a reminder annually, asking if we’d had any life changes that might warrant changes to our trust.
He didn’t make any specific recommendations - eg. give this kid $xxx, give that one a percentage - but he did point out potential pitfalls and problems for our trustee in some of our original plans.
Presumably my $1mm will be considerably more by the time I need assisted living, although I’m sure those costs will rise commensurately.
If the money is earmarked for charity, I’d rather chose the charities myself.
I think I’d keep it more generational. Either the nephews and nieces OR the greats, with a separate bequest to those nephews and nieces who are childless. Although that would negate the need for trusts.The sister that doesn’t need the farm owns her home in AZ. The sister that could use a place to live doesn’t want to live in the country, far from her doctors. And frankly, I’m not likely to predecease her.
That’s a very good point, although a trust in perpetuity to cover educational expenses for the coming generations seems like a good thing, I’d have to have some company to administer it. And as I see my nieces and nephews produce fewer children than my parents and sibs, might peter out altogether.
Perpetuity is a long time, and TBH, a million bucks isn’t all that much. Your estate will probably be paying a manager a substantial share of that million over time just administering it. My wife and I have drawn the line at the family as it currently exists. Our future generations will have to rely on our kids’ generation or their kids’ generation for a handout. An endowment of a million dollars just doesn’t go that far.
Have you worked out the numbers in detail? This seems a bit of a stretch to me.
Colleges cost vary widely, but an average is about $40,000 per year for tuition and expenses. A $1M fund used purely as an endowment (spending only the interest) might just barely cover one person’s college expenses per year, assuming the kids’ ages are spaced at least 4 years apart. On the other hand, ignoring the interest, spending the $1M itself would cover about 6 full four-year degrees, not 9. Whether you can make it work out for the 9 (plus any future kids) depends on exactly how the kids’ ages are spread out and what kind of investments are made.
I mentioned it because a friend inherited a portion of her great-grandparents’ farm (or great-great-grandparents, I’m not sure), but the way it was done, a majority of the heirs need to agree in order to make any changes. With people scattered all over the country and the passage of generations, it’s very difficult to do so. For a lot of the heirs, it’s such a small amount and so infrequently relevant that people aren’t good about updating the contact information with a second cousin they’ve never met, and they get lost, for just one example. I don’t know the details of how it was set up or managed, but I know it’s more of an irritation than a benefit for my friend, and she can’t easily opt out.
For the farm, what you might want to do is file a Transfer on Death Deed that specifies your niece as the as the beneficiary. And the same with any other property you want to go to a specific person. In case you’re not aware, a ToDD is a simple document you file with the county that transfers a property or asset to a person when you die. You can do it all yourself. The ownership transfer happens outside of your estate, so it’s not part of probate. This can greatly simplify your probate since the asset is not in the estate for the heirs to fight over. One other advantage is that you can change or delete the ToDD at any time without having to update your will. So if your niece is no longer able to take the farm, you could change the ToDD to someone else or delete it entirely. You can generally file ToDDs for all your property. Some counties will also support ToDDs for vehicles as well.
Do you know how your niece would take care of the menagerie of pets you have? Would she need to move to the farm? She might be willing to do that today, but when you die, she might be married, working in a distant city, and living in an apartment. She might not be able or willing to take care of all those pets herself. Also, there’s a pretty good chance you’ll outlive your pets. You might not need the same kind of care for your pets later on if you only have 1 or 2 pets by then.
A thought I had would be to specify that the money be divided into 529 educational accounts for the youngest X descendants. So if you said 10 descendants, than each would get a 529 with $100k. In case you’re not aware, 529 accounts are special accounts which grow tax deferred and can be used for educational expenses. The account can be converted into an IRA if the person does not need it for educational expenses. So either the money is used for school or locked away until retirement age. Setting up 529s would help ensure the money was not wasted without having to setup a trust. Be sure to talk with an attorney if you consider something like this.
Of course, if you want a simple solution, just leave everything to the SDMB. I’m sure some of the members would love to live on your farm and take care of your pets
My in-laws used the same law firm about 15 years ago and it cost them about $3500, too. We’ll pay almost double that, and it seems to be the going rate. There are much cheaper options if we just want a will, but for a minor child a trust is probably the way to go. The money is being spent to provide continuous support for our kid—no gap where mom and dad just died and they have to figure out how to pay rent and next semester’s college tuition.
My Dad is getting his will done at the same firm, and it is going to be $3000. That also includes financial and medical power of attorney for me and my brother.
Again, we could do it cheaper, but the goal is to do it right. My Dad has significant assets, but no real property, so if done right we can completely avoid probate, or make it extremely simple. A lawyer for probate would likely cost more.
All of this is just insurance, though. If there are no questions or fights over my Dad’s estate, then the money spent on the will was a waste. If my wife and I live until my kid is 40+, then the trust was never necessary.
The trick is to figure out how to bounce the last check I ever write paying for the last days of my hospice care…
Don’t wanna hijack the thread, but my wife and I just had a trust created, along with updated wills, POAs, and final directives. Total cost was about $3700. Of course, we’re in the middle of Kansas, where the cost of living is significantly cheaper than other parts of the country.
A trust, as has already been mentioned, avoids probate for one’s estate.
My understanding is that once you establish the trust, you then need to designate it as the beneficiary of all of your investment and banking accounts, along with things like your car or house.
Rather than setting up a trust, I designated my brother as the primary beneficiary of almost all of my accounts.
Maybe gift your heirs while you’re still alive? A lump sum or a little doled out once a year. They don’t have to know the ultimate total of your gift. But I’d keep it no strings attached. Though depending on their circumstances that might backfire, them coming back for more or disappointment over their choices in how it’s spent.
I’d suss it all out with an elder care / estate attorney. But I agree the simpler the better for bookkeeping and keeping administrative expenses low.
