How much do you trust you kids?

[Henro]

I keep coming up with strange questions...I know!

BUT getting older, I also know we all have limited time on the planet. And I do have a VERY close relationship with my two daughters.

So having "enough" but not a lot, I decided I would rather have some things pass fully to the kids, rather than give a percentage to the state, when I pass myself. BUT the real reason, is the risk of nursing home care cost, if I would end up in a nursing home for whatever reason, for an extended time, my resources would be drained totally before medicaid picked up the tab for my care.

So I put some (about 40 percent) of my liquid resources into my kids and their husbands names, in an irrevocable manner, as gifts that they have no access to, unless I give them to them when I am still alive. When I am gone they will have access to them.

But first, I talked with each of them, and told them of my plan, but that I would only do it if they agreed to one condition. That is, if I needed the money, I would transfer the gift to them and they would then give it back to me, but could keep a good bit of the value it gained between then and now.

But that is just money. There is also the house and property. I could transfer the property into my two daughters names, but what if one went insane or something, and turned totally different than she has been for what is now about 50 years?

I concluded the risk, even if just theoretical, and most unlikely to happen, is too great. I can lose the money I put side for them if something would happen, but that is spread among four people, so more than one would not likely go sour. Of course if in a nursing home, after all my liquid resources were consumed, if medicaid started picking up the tab, they would place a lien on the property when I passed.

So I kind of decided the kids will just have to deal with paying inheritance tax to the state on the property, and possibly suffer from medicaid liens, when I kick. I just can't seem to accept the risk, as improbable as it might be, to be able to transfer the deed to my kids.

How weird am I as a parent?

 

[PHPaul]

I wrote up a big long post and decided it was probably unwise to put that kind of information online.

Short version is that assuming the estate isn't liquidated to fund "end of life" care, it gets sold and the cash divided according to specific instructions.

The estate isn't large enough to trigger inheritance taxes.

 

[Elliott in GA]

Talk to an Estate Planning attorney; the initial consultation should be free. There are ways to accomplish your goals with little risk.

FWIW, the Federal Unified Credit covers estates under $13 Million; so no federal tax.

 

[Henro]

I wrote up a big long post and decided it was probably unwise to put that kind of information online.

Short version is that assuming the estate isn't liquidated to fund "end of life" care, it gets sold and the cash divided according to specific instructions.

The estate isn't large enough to trigger inheritance taxes.

Actually, in Pennsylvania, I believe one dollar is enough of an estate to incur inheritance taxes. I don't know for sure but I do know that a friend whose wife passed away recently received a letter from the states or the county telling him that up to 15% inheritance tax was due on a bank account that he had with his wife, that only held like $1000 in it or something like that. Since there were two names on the account, the tax would only be charged against half of that amount.

But if he was the spouse, then there would be no tax. Please check that box and return the form in duplicate.

But that wasn't my question actually.

The basic question was about how much trust people put into their kids, given that there's always the possibility of unexpected future change, for possible health or legal reasons.

 

[Henro]

Talk to an Estate Planning attorney; the initial consultation should be free. There are ways to accomplish your goals with little risk.

FWIW, the Federal Unified Credit covers estates under $13 Million; so no federal tax.

I guess I'm poor at expressing myself! As I mentioned, I was really asking a question about how much trust people put in their kids. Given whatever unknowns may exist in the future…

I don't need the advice of an estate planning attorney at this point, although if one is planning for the future and is married, this is definitely a smart thing to do.

Federal taxes are not a concern. State taxes would be as well as Medicaid issues if one is unlucky and ends up in a home for an extended period of time.

It's possible to minimize or avoid shifting resources into Medicaid payments if you set up an irrevocable trust and exceed the five-year look back before you end up needing Medicaid. Again, I am tuned into this pretty well.

But what I'm not tuned into is relating to the difference between how much I trust my girls and how much the future might change things on their end with negative results impacting me, should I put the deed in their names and exceed the five year look back period.

i know I tend to over think things. But I can't think of a better place to ask the question and get answers or opinions than here at OTT.

 

[Russell King]

I trust my family more than I trust the government to protect my interests.

 

[Elliott in GA]

I guess I'm poor at expressing myself! As I mentioned, I was really asking a question about how much trust people put in their kids. Given whatever unknowns may exist in the future…

I don't need the advice of an estate planning attorney at this point, although if one is planning for the future and is married, this is definitely a smart thing to do.

Federal taxes are not a concern. State taxes would be as well as Medicaid issues if one is unlucky and ends up in a home for an extended period of time.

It's possible to minimize or avoid shifting resources into Medicaid payments if you set up an irrevocable trust and exceed the five-year look back before you end up needing Medicaid. Again, I am tuned into this pretty well.

But what I'm not tuned into is relating to the difference between how much I trust my girls and how much the future might change things on their end with negative results impacting me, should I put the deed in their names and exceed the five year look back period.

i know I tend to over think things. But I can't think of a better place to ask the question and get answers or opinions than here at OTT.

I do not intend to short sell your knowledge, as I am sure you have looked into these matters.

However, you are asking questions and have concerns that a lawyer could address to your satisfaction. Knowing the answers to your questions/concerns would probably result in you not having issues of trust with your relatives.

I am a lawyer; I am not your lawyer. You need to consult an attorney in your state about your estate goals.

 

[Henro]

I do not intend to short sell your knowledge, as I am sure you have looked into these matters.

However, you are asking questions and have concerns that a lawyer could address to your satisfaction. Knowing the answers to your questions/concerns would probably result in you not having issues of trust with your relatives.

I am a lawyer; I am not your lawyer. You need to consult an attorney in your state about your estate goals.

I’m still not communicating well. I’m not asking for legal advice. Or estate planning advice. I’m asking for peoples opinions on how much they trust their kids, with respect to the probabilities that the kids could change in the future. Could be I am more risk adverse than most.

Actually, I’m pretty sure I know what the legal answer would be: Don’t take the chance trusting your kids!

So I guess the question really is, how weird am I for thinking this way?

I mean, as far as basing my philosophy, pretty much on trust, rather than legal aspects of dealing with estate planning. For legal advice no question that I have and would use the services of an estate planning attorney. I believe that is even more important for a couple than a single person. But that’s not where I’m at in this thread…

edit: I may have made a mistake, giving background details that illustrated the reason I was even asking such a question because I do and will continue to trust my kids with my life.

I was trying to focus on how things external to the kids might affect my future. An illness that affected their way of thinking, a lawsuit (justified or not) against them, things like that.

 

[jyoutz]

You can always put their name on the house deed and accounts as co-owners. That way they do need to go through probate. They are already owners as the surviving party.

 

[Henro]

You can always put their name on the house deed and accounts as co-owners. That way they do need to go through probate. They are already owners as the surviving party.

That’s an interesting thought. Actually, before I did anything I would get legal advice, and I was not writing off Elliott’s advice in any way.

I think, but I don’t know, that doing that would still offer similar risks as putting the property in the two girls names, should something go wrong in one of their minds for whatever reason, or for reasons beyond their control, due to a lawsuit or something.

I think the thread title actually may have been an error. I believe 99% of us really do put the ultimate trust in our children. At least until we see some reason not to. Unfortunately, in some cases, kids go down the wrong path and become drug addicts or whatever, and certainly at that point parents should (and probably do) reevaluate things.

 

[rc51stierhoff]

I’m still not communicating well. I’m not asking for legal advice. Or estate planning advice. I’m asking for peoples opinions on how much they trust their kids, with respect to the probabilities that the kids could change in the future. Could be I am more risk adverse than most.

Actually, I’m pretty sure I know what the legal answer would be: Don’t take the chance trusting your kids!

So I guess the question really is, how weird am I for thinking this way?

I mean, as far as basing my philosophy, pretty much on trust, rather than legal aspects of dealing with estate planning. For legal advice no question that I have and would use the services of an estate planning attorney. I believe that is even more important for a couple than a single person. But that’s not where I’m at in this thread…

edit: I may have made a mistake, giving background details that illustrated the reason I was even asking such a question because I do and will continue to trust my kids with my life.

I was trying to focus on how things external to the kids might affect my future. An illness that affected their way of thinking, a lawsuit (justified or not) against them, things like that.

Good day.

Honestly you are mixing multiple things into a thread that many might imagine contribute to some of the concerns you have mentioned…I think some have tried to give some suggestion to help based on some of those likely contributors. Maybe I am reading the thread wrong, but that is what I am picking up from it.

However, your thinking in this thread is not what makes you weird (‘weird’ was your term)

To your question…They’re your kids, who would know better than you if you can trust your kids for the situations you are concerned with in this thread?

Every family is different and each in the family is an individual…gonna be hard to get an average or probability on trust of your kids…your situation is unique as they all are (and so are the individuals) which most likely don’t fit into an average.

Now let’s get serious for a moment: If you are concerned or don’t have confidence how your heirs would treat your tractors, PM me and we can make arrangements so that I am designated as the beneficiary. They would be provided shelter, fresh fuel, oils and maintenance on schedule and would be afforded plenty of time to be used in large forest / pasture setting as they were intended to be used.

 

[RCW]

I do not intend to short sell your knowledge, as I am sure you have looked into these matters.

However, you are asking questions and have concerns that a lawyer could address to your satisfaction. Knowing the answers to your questions/concerns would probably result in you not having issues of trust with your relatives.

I am a lawyer; I am not your lawyer. You need to consult an attorney in your state about your estate goals.

@Elliott in GA obviously speaks from a position of expertise as an attorney. We hired an attorney to take care of MIL’s estate and home sale after her passing.

Will likely do so when my folks pass.

That said, there’s many aspects that can be accommodated in anticipation of end of life by an attorney familiar with the applicable laws.

My folks have accomplished some planning, but are resistant to a lot of things like joint accounts, etc.

Welcome to the world of former retired dairy farmers. They are fiercely independent and I’m proof genetics works although off the farm for many years.

I don’t agree with their degree of independence at this juncture, but must respect it. (I’m POA for both now and Executor when time comes).

I’m educated as a Forester and biologist, so I haven’t a clue how to get there.

 

[Henro]

Good day.

Honestly you are mixing multiple things into a thread that many might imagine contribute to some of the concerns you have mentioned…I think some have tried to give some suggestion to help based on some of those likely contributors. Maybe I am reading the thread wrong, but that is what I am picking up from it.

However, your thinking in this thread is not what makes you weird (‘weird’ was your term)

To your question…They’re your kids, who would know better than you if you can trust your kids for the situations you are concerned with in this thread?

Every family is different and each in the family is an individual…gonna be hard to get an average or probability on trust of your kids…your situation is unique as they all are (and so are the individuals) which most likely don’t fit into an average.

Now let’s get serious for a moment: If you are concerned or don’t have confidence how your heirs would treat your tractors, PM me and we can make arrangements so that I am designated as the beneficiary. They would be provided shelter, fresh fuel, oils and maintenance on schedule and would be afforded plenty of time to be used in large forest / pasture setting as they were intended to be used.

I agree. I am a detailed person and a weaknesses I have is believing it’s good to provide details, if I ask a question, as to the reason why I’m asking the question.

But it certainly can make a thread go astray.

I really should’ve titled the thread, “ What’s the chances?”

And that gets back to asking a question something like “can I win the lottery?”

Answer is: certainly a could happen…

So I now realize I started a meaningless thread!

As far as the tractors go…

I’ll discuss your offer with the tractors and the implements as well, and if they seem to express an interest, I’ll get back to you! I can’t believe you’re kindness!

 

[Henro]

This thread actually has helped me reach a conclusion to my question.

As I said, I trust my kids with my life. So I have no reservations in that regard, but I am a realist, and I understand that things can happen that are beyond the control of each of us.

Since those things can’t be predicted anymore than winning the lotto can be predicted, I’ve concluded the best thing I can do is not change anything with respect to the property title or deed.

Nobody can predict the future. Hopefully I’ll pass away in my sleep when I reach 100. Wait, let’s make that 110… I’m an optimist!

In the meantime, I’ll just tell my kids to cross their fingers and wish for a smooth departure for their old man, hopefully long in the future!

I truly appreciate everybody’s input to this thread. It helped me a lot!

PS: I do understand there’s a way to avoid possible Medicaid liability if an irrevocable trust is established to hold the property deeds and other resources if I would choose to do that. Of course that is subject to the five-year look back for Medicaid and also takes away control of the property and included resources from me totally.

Not being a betting man, I’m placing my bet on myself, and if I end up in a nursing home at some point in the future for an extended period guess I lost that bet! OR rather my kids did I guess…

 

[Tarmy]

To answer the question…totally.

wifey and I own nothing…the kids are loaded via a trust. We technically have 50k and everything else is theirs via a Trust that they are the beneficiaries of. They are both in their 20s and know that they will be very well set when we pass and how our wishes are to be handled as we age and they gain full access to money/homes/etc.

If you can’t trust your own kids with how they will handle you/your money/your old age…you did something wrong.

Good luck OP…watch out for tax issues with your plan…

 

[RCW]

To answer the question…totally.

wifey and I own nothing…the kids are loaded via a trust. We technically have 50k and everything else is theirs via a Trust that they are the beneficiaries of. They are both in their 20s and know that they will be very well set when we pass and how our wishes are to be handled as we age and they gain full access to money/homes/etc.

If you can’t trust your own kids with how they will handle you/your money/your old age…you did something wrong.

Good luck OP…watch out for tax issues with your plan…

From my limited knowledge, that’s the preferred arrangement.

 

[Henro]

To answer the question…totally.

wifey and I own nothing…the kids are loaded via a trust. We technically have 50k and everything else is theirs via a Trust that they are the beneficiaries of. They are both in their 20s and know that they will be very well set when we pass and how our wishes are to be handled as we age and they gain full access to money/homes/etc.

If you can’t trust your own kids with how they will handle you/your money/your old age…you did something wrong.

Good luck OP…watch out for tax issues with your plan…

My question is out-of-the-way now, but your comments bring up an interesting consideration that could be some interest to others that read this thread if anybody reads it.

This whole estate planning thing is quite complicated and I don’t claim to be knowledgeable. But I have had some experience with it. My experience related to trying to avoid having all our resources consumed due to a long-term care situation in a nursing home.

I understand that there are both revocable and irrevocable trusts. If one is to avoid having their resources consumed to pay for long-term nursing care, I believe the trust vehicle used must be irrevocable and what I think they call Medicaid compliant. A revocable trust works for avoiding probate from what I understand, but does not avoid penalties that can be assessed if one (or both) of the two spouses ends up in a nursing home situation that is not covered by some kind of insurance. Perhaps some kind of long-term medical care insurance covers this. I don’t know because I didn’t check into that.

As Elliott pointed out above, a qualified elder law attorney can be priceless in setting things up. I guess it depends on your goals. It could be that once five years passes, whatever trust one uses is exempted from Medicaid penalties if you end up in a care home.

Very complicated and it always needs to be researched according to the specific situation of the individuals involved.

In Pennsylvania, the estate tax for direct descendants like my daughters is 4.5% I believe. Might be 4.2% I don’t remember. But it’s not excessive.

What is excessive is, if you have any resources, and you end up in a long-term care situation, you must consume those resources all the way down to something like $8000 or less before the state will take over and pay for your care.

If you don’t have any resources, you get a free pass and the state picks up your care right away. So a lot of people who have some resources try to do what they can to shift them to their kids or whoever.

Even if you set up an irrevocable, Medicaid compliant trust, I’ve been told that it is not effective until five years have passed from the date it’s established. This came from an elder attorney not something I read on the Internet.

If your kids are in their 20s, chances are you are in your late 50s early 60s, so you have made plans early enough to get beyond the five-year look back for Medicaid. This is good if your trust is Medicaid compliant. If it’s revocable, then it probably isn’t. Something to Ask your attorney. You are likely young enough That you may not have considered the impact of long-term care with respect to the trust you established. or everything could be picture perfect! Just throwing this out because a lot of people don’t think about these things and we don’t need any surprises later.

 

[Tarmy]

Henro….good comments…all of them. I owned a company with over 100 employees and learned decades ago that a good attorney (especially to specific tasks like estate planning) and a good tax attorney are worth every penny I pay them…multiple times over. We started this plan BEFORE the boys were born. Property, cash, ongoing income from various sources all must be managed and properly classified so tax consequences are minimized. When the pile is big enough…the planning can save hundreds of thousands of dollars.

 

[D2Cat]

You keep indicating you're not communicating well. To directly answer your question I trust my kids 100% on any matters I may have.

To go where you don't want to go, if you assign assets to your kids in a irrevocable trust it means it is theirs your can't get it back, and this is your dilemma. You want it back it you need it.

If you have a trust set up properly you have control of all your assets until your death (and your wife's death), then the remaining assets are distributed and you have designated, with conditions, time and percentage, or items. This is a revocable trust and can be changed.

Maybe the real question is do you trust your wife with all things of value to be assigned as you like after your death if she survives you! Could be you have a trust set up with everything spelled out, however upon your death all thing would normally go to the surviving spouse. That person can now do as THEY choose and could leave out the two girls...... and get a new trust to do as she pleases.

 

[Mark_BX25D]

Talk to an Estate Planning attorney; the initial consultation should be free. There are ways to accomplish your goals with little risk.

That's the best advice.