[midlifealpha]

We are in a situation where sometime I am expected to be widowed, and I am exploring options about how to handle the first wave of inheritance (my future death being 2nd)

We'll probably have a tidy sum of life insurance money, not up to a million but more than 500k. My wife does not understand that I've unplugged, and swears up and down one of these hotties chasing me down, is going to rob me blind and her sons won't get any of the inheritance.

HaHa, fat chance of that, but nevertheless, I am not actually against this living trust concept. Mainly because structured correctly it really shouldn't change my way of life, but offers them some protection, and maybe some future help.

Will I be at the mercy of just blindly googling a local lawyer not knowing how expensive it will be to set all this up or are there resources out there if you want to DIY some of this. She does have some lawyer friends that say they'll help pro-bono, but given our rocky past I don't want to get screwed by them so I said "no I'll figure something out".

I've explained to her that I would be the executor and she seems ok with that (I'd make investment decisions as well as when to liquidate for certain events). I am thinking of things like:
- Paying off any student loans in whole from the trust or just paying it out-of-pocket
- Whether or not to payoff my house
- Make rules about helping out the kids (One in College, One graduating this year) if they ever want to purchase property. Maybe a down payment on a place I could assist with.

I mean I really don't know what all you can do out of a trust. One friend said as long as you are employed, just keep paying your mortgage, and student loan, and take the tax writeoffs. Then if you get laid off or whatever maybe you can liquidate pay the house. I also have decent cash-on-hand right now so not having a mortgage I am sure I could get by for 12-18 months easily, plenty of time to get back into that 6 figure range.

Mostly I am just wondering:
- Can we make assets owned by the trust that would not be subject to any future divorce proceedings with a new wife.

[fortysix]

Your question:
"Can we make assets owned by the trust that would not be subject to any future divorce proceedings with a new wife."

Your answer:
I don't know what state you are in, but if you are in a community property state, which is a state where most people complain about being divorce raped, any separate property that you had before marriage, as well as the profits and interest from that separate property retains its character as separate property, unless you put such separate property into a joint account with your (new) future wife. So if it remains in the trust, my understanding is that you are fine.

[Basement Dweller]

Also check out legal zoom form trust templates.

[The Beast1]

Get a lawyer. There are too many gotchas in the family court system to ask anonymous people on the internet for help.

[midlifealpha]

Agreed, in the end for protection, I will have to do that. I just want to be sure to tilt as much as I can in my direction. I've at least her convinced that an 18 and 21 year old are not well equipped to handle that cash infusion at that age. Maybe reading through Legal Zoom, and finding some examples on the web at least will get me to where I am not walking in there like a moron, which could save on the fees. Hell I've got funds returning 15% over a 5 year span in the 401k, even investing a big chunk and letting it ride would be good while they learn to create a life without it. Let's say the money doubled before I went, now they'll get everything I have insurance wise, plus my 401k and any cash-on-hand. Or I can just buy out my house, etc.

Based on another thread I've decided to read Millionaire Fastlane and The Lean Startup, maybe I can use some free time to get something else going with part of it as well. Or maybe we spread it across various high risk, high-reward funds. The only real goal is to keep it out of the hands of a new wife, but it would be nice to learn what types of business you can conduct.

(02-18-2015 09:43 AM)The Beast1 Wrote:  

Get a lawyer. There are too many gotchas in the family court system to ask anonymous people on the internet for help.

[tarquin]

Yes, get a lawyer. I'd also like to point out that Tax Laws are very important when it comes to these kinds of things, so you will want a lawyer who specializes in Estates and Trusts as opposed to a general practice family attorney. Ignore legal zoom. You can't do this yourself.

Just be aware that the concept of a trust is a distinct legal entity. You can't, at will, decide to liquidate it and take all the money. You will likely nominate a financial adviser to manage the trust's money from which you will get a set amount at determined intervals. That is the most likely way that the trust will be set up, but talk to an attorney that specializes in this sort of thing.

[midlifealpha]

Is a Living Trust the only way to protect a 2nd wife from possibly coming in and laying claim or would a simple pre-nup be all that was needed.

Honestly I'd like to have some say-so on how it was run. For instance I would want the right for the trust to purchase my house if I said so (let's say an extended job layoff). The trust would own the house, but I'd be able to continue to live there for instance.

Also, with companies like Vanguard and others you can spread money across some inexpensive per the lazy portfolio and you really don't need a money manager to do that. I could see if this thing were in the millions but I would hate forking over $4-5k per year for some guy to do this kind of thing. If the life insurance total was 500k let's say, I don't want that thing eaten up by fees. If I lived another 40 years that's a lot of money wasted. Again I am asking this stuff here before I go paying a lawyer to tell me, I just don't want the lawyer to steer me towards an expensive portfolio manager if I can help it.

(02-18-2015 11:09 PM)tarquin Wrote:  

Yes, get a lawyer. I'd also like to point out that Tax Laws are very important when it comes to these kinds of things, so you will want a lawyer who specializes in Estates and Trusts as opposed to a general practice family attorney. Ignore legal zoom. You can't do this yourself.

Just be aware that the concept of a trust is a distinct legal entity. You can't, at will, decide to liquidate it and take all the money. You will likely nominate a financial adviser to manage the trust's money from which you will get a set amount at determined intervals. That is the most likely way that the trust will be set up, but talk to an attorney that specializes in this sort of thing.

[tarquin]

It depends on what investment firm you use. Understand how the fees are charged up front. If it is a 1% fee on the capital invested, but the guy gets 8-15% annualized returns, are you really going to complain? Those guys exist and can make you money over the S&P. Ask around and find somebody competent locally. Or you could just have it placed into an index fund, but either way you are going to end up paying somebody something to administer it (i.e. a trustee to actually sell/buy assets and cut the checks to the beneficiaries) aside from just having the money in an investment vehicle. That costs money too.

At this point, I think you need to find an attorney. If you are uncomfortable with the local people, research some attorneys from the nearest large city and start making some phone calls. This is really something that is incredibly personal and what is best for your family is best served by sitting down with somebody.

Also know that you may want to actually transfer the life insurance policies into the trust before death. Again, this is something the attorney may know.

If your wife's friends are willing to help pro-bono, perhaps you call one of them up and explain that you don't want to use a family friend for personal reasons, but you want to have some general ideas of the questions you should ask and the type of legal/administrative costs that you will incur. Either way, start the ball rolling now, not later.

[midlifealpha]

(02-19-2015 06:10 PM)tarquin Wrote:  

If your wife's friends are willing to help pro-bono, perhaps you call one of them up and explain that you don't want to use a family friend for personal reasons, but you want to have some general ideas of the questions you should ask and the type of legal/administrative costs that you will incur. Either way, start the ball rolling now, not later.

That's a helluva nugget right there. I mean your whole post was good, but I hadn't even considered sitting with them anyway to get advice on what questions to ask....