# Estate planning - Money to kids at what age?



## yyzvoyageur (Apr 10, 2009)

My wife and I are planning our wills. Were we both to die, the residue of our estates would be held in trust to be split equally among our children. The question is at what age should we have our trustee transfer the full amount to them for their own use? Whatever the age we choose, our trustee will have the freedom to draw from that trust for the support and education of our children, prior to them hitting that target age.

So what have others done? One lump sum at 25? 21? Split it into thirds: 18, 21, 25? Thoughts?


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## mind_business (Sep 24, 2011)

I don't have kids, however I do remember I was not great with money at any time in my 20's. If it was me, I'd do the following:

50% at age 25 (likely will be out of University by then)
50% at age 30 (hopefully will have learned the importance of money management by that age.


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## Plugging Along (Jan 3, 2011)

We are going to do 25 for the first distribution and the other half at 30. This also has our trustee having access to the fund for everything they need up until those times.

When my uncle past away, my cousins all received inheritances of over $2 mil each (may have been even up to 5, but I'm not sure). Essentally, all of the younger blew away everything by the time they were 25 with very little to show. The one who was older was the only who still has anything.

The people that I know well enough to ask who will be passing on their fortunes are all going with at least 25. The one exception I know is the kids are already finishing their first or second degrees and have shown to be very responsible. They have no age specification.


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## Ihatetaxes (May 5, 2010)

Ours would be split into thirds and given at 25, 35 and 45. We do have family who lost both parents while the kids were late teens and early 20's. The trust was very old school and the two girls never got lump sums only yearly allowances plus a house bought for each in the trusts name. The sons got lump sums but not until they were older and it was a good thing because they both ended up having careers and not being spoiled brats. Neither of the girls ever really held a job.


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## humble_pie (Jun 7, 2009)

there's no one-size-fits-all.

among the important variables are (estate worth) / (no of children.)

another important variable is present ages of children & what you know about their characters, if they are older, ie at least teenagers.

at one extreme, a will for testator parents who die together & whose joint estate is quite small often includes the right for the executor to make over the entire estate to the tutor or guardian of the children. This is to avoid trustee fees that are going to eat up, not only the income from, but in fact some of the capital of, a small estate.

at the other extreme, substantial estates often continue to hold a portion of inheritances in trust until each child reaches the age of 30 years. I have heard of cases where portions carry on to age of 40.

i personally think 18 is too young, except perhaps for a small legacy to be paid to each youngster which he or she will probably spend. Personally, i like the ages of 25 & 30 for large estate distributions. Remember, if the trustee has the right to encroach on capital he can exercise this right prior to age of 25 for special circumstances.

be sure you consult the lawyer for that special clause that will prevent anticipation of inheritances by the heirs & also for that special clause or clauses that will prevent, or should be aimed at preventing, an inheritance from falling into common marital property if an offspring should divorce.

come to think of it, while you are peering into your futurescope & imagining life for your children with yourself & spouse already dead, buried & gone to live with angels while estate will remain largely tied up in trust throughout their 20s ... be sure to think about the possibility of grandchildren, in the event that one or more of your children should marry, have children, but die before receiving his or her entire share of the trust.

(said share won't distribute according to his or her will) (it will distribute according to your will, if you remember to figure all this out)

(if you don't figure it out & if the parental wills don't provide for succession in the case of a child who dies after both parents die but before receiving his or her share in full, it's possible an intestacy for that portion of the estate could occur, even though such child might be an adult with children of his or her own).

if it's a large estate, you should have a top-notch solicitor who should be busy planning all this, rather than relying on anonymii in the internet.


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## humble_pie (Jun 7, 2009)

_the two girls never got lump sums only yearly allowances plus a house bought for each in the trusts name._

mon dieu. Taxes how old are you. Lifetime trusts for female descendants have hardly ever been seen since the time of queen victoria ...

please put me down as one who opposes the infantilization of women.


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## Ihatetaxes (May 5, 2010)

humble_pie said:


> _the two girls never got lump sums only yearly allowances plus a house bought for each in the trusts name._
> 
> mon dieu. Taxes how old are you. Lifetime trusts for female descendants have hardly ever been seen since the time of queen victoria ...
> 
> please put me down as one who opposes the infantilization of women.


The father died around 1980 and I wouldn't be surprised if his will had been drawn up in the mid 60's. I have no idea why he chose this path but there was family money going back at least one more generation so it might have been something his father had done so he repeated it. 

Funny thing is it probably saved at least one of the daughters from ending up destitute (or god forbid actually having to hold a job) as she had a couple of gold digging boyfriends who tried their best to get at the money and left when they realized they could not.

She has her cats though.


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## donald (Apr 18, 2011)

If you have alot of wealth to pass down to a child i would mentor and teach money skills and how to handle it(emotional aspect to)when you are still alive.

Maybe teach them portfolio skills?maybe start them off with a 10-20k portfolio with you guiding and teaching,let them learn and fail but support them in there mistakes.

Isnt it like any other skill really?if you teach a kid how to golf,cook or whatever.

Giving a kid a large sum is like giving a 16yr old that just got a licensce keys to a porsche in a way?Too much power.(and not a clue how to handle)

Dont you "groom" them after a certian amt?Wouldnt it be the same as passing on a business(physical one) to a child?You wouldnt expect them to know how or what to do to be able to run it nor would you expect it?I think if you have alot to pass on you have to treat it serious and educate them when both you and child are alive,not sure what age you would do that but thats what id do if i was in that position.


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## marina628 (Dec 14, 2010)

My husband and I were both on our own on 18 and had no choice to be good with money.Our oldest is 19 and I trust her with everything ,she is much more mature than her age.I have friends in their 40s who can't be trusted to save a dime so I think you should know your children best.
When my daughter went off to School 3 months ago ,I helped her do a budget and told her if she uses credit cards they must be paid off in full.She has $100 a week budget and even though she has mid $xxxx in her bank account she takes her $100 cash out and that's it.I rather teach my kids what I can about money while I am living than hold money hostage from the grave but that is just my opinion.


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## marina628 (Dec 14, 2010)

Thanks Humble Pie you bought up some very good points.My husband and I have the step monster clause in our wills in case one of us dies and remarry.This situation happen to very close family friend where the mom died and father remarried after 6 months then 10 years later he died also of a young age ,the step mother got everything and their 17 year old son was left out with not much more than his clothes.
You almost have to write a few wills for each situation that may come up in the future.We just did our will again this year when our oldest turned 18 years old and god willing will do it again when our youngest turns 18.We also have a business with employees so had to do a plan for our business as well ,that proved to be the most challenging task so far to plan who will run the business when we are gone.


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## crazyjackcsa (Aug 8, 2010)

When you die, the money goes to the kids. Or 18, which ever is second. You done gotta rear'em right!


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## Plugging Along (Jan 3, 2011)

donald said:


> If you have alot of wealth to pass down to a child i would mentor and teach money skills and how to handle it(emotional aspect to)when you are still alive.
> 
> Maybe teach them portfolio skills?maybe start them off with a 10-20k portfolio with you guiding and teaching,let them learn and fail but support them in there mistakes.
> 
> ...


The problem is that you can die when they are too young to have the financial education. We've been talking to our oldest daughter about money, and finances for 3 years now. She's pretty advanced, but is only turning 6  So despite what I am teaching now, if my spouse and I die tomorrow, I don't think she'll have the financial education. I'm have just manage to stop getting the 2 yo to stop throwing coins. 

All kidding aside, we have been talking fianances (in an age appropriate way), and plan to continue on so. The plan is still for them to get their inheritances when they are 25 or older (hopefully, we're around, so its a moot point). We do plan review the will as the get older, and if they are showing financial responsibility at an early age, then we will modify the wills later on.

One person I know, talks finances with his kids all the time. Both of the kids (very early 20's) are very responsible. I know everytime he goes on a trip, he goes over all the finances with them in case something happens, and who to contact, and where all the accounts are. It seems like overkill at times, but I think it's teaching them alot.


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## MoneyGal (Apr 24, 2009)

PA - I'm pretty sure you know this already - but minor children cannot inherit substantial sums of money in Ontario (and likely across Canada, but I'm most familiar with the Ontario laws).


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## humble_pie (Jun 7, 2009)

to the kids at age 18 ? No. Way.

kids that age have no clue how to run a business, manage real estate properties, or manage complex investment portfolios. Nor should they. Even at age 25 most offspring could not manage the foregoing. The hope is that by 25 & 30 they will be mature enough to at least not lose it.


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## Plugging Along (Jan 3, 2011)

MG - Thank you. I did know that. We have our executor taking care of that. Hopefully, both spouse and I will be around until they are well past 18.


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## Square Root (Jan 30, 2010)

I am the executor of my sisters estate and her son is the sole beneficiary. The funds go to him on his 28th birthday. She picked this date because as she was dying she knew he was an irresponsible, immature young man. Since her death he has proven her assessment correct. Really depends on the children and of course on the amount to be transferred. Any thing really large might cause you to wait longer while a more modest estate might go earlier.


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## donald (Apr 18, 2011)

I didnt word that right,i was meaning more so in a "normal" context and not a early death of a parent.I know 21 yrs and younger would def most likely not have the abilities to be able to handle sums of money(thou kaejs would obviously)

I know some parents with a large asset base and its unclear if "money and finacial litercy are common?Somewhat left in the dark?I know my dad never would talk about his finances with me nor his father to him.How common is money talked around a dinner table?I would guess its common in high net worth families?

I think once someone establishes a net worth asset base of a few hundred thousand and up it should be talked about when parent and child are alive?Money talk can be like sexual talk between parent and child(just dont go there,even thou you might have a idea)Might be in the dark about this?Did anybody here talk about money,wills ect with a parent?


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## marina628 (Dec 14, 2010)

My father is much more advance with the financial knowledge than My mom although in later years she is improving her knowledge base.My parents have openly discussed their estate with us and what they plan to do.They are in their early 70s and have low $xxx,xxx left in assets aside from their home and some other property.They are in process to sell some property now and deal with the capital gains while both are living.


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## Plugging Along (Jan 3, 2011)

donald said:


> I know some parents with a large asset base and its unclear if "money and finacial litercy are common?Somewhat left in the dark?I know my dad never would talk about his finances with me nor his father to him.How common is money talked around a dinner table?I would guess its common in high net worth families?
> 
> I think once someone establishes a net worth asset base of a few hundred thousand and up it should be talked about when parent and child are alive?Money talk can be like sexual talk between parent and child(just dont go there,even thou you might have a idea)Might be in the dark about this?Did anybody here talk about money,wills ect with a parent?



Great question Donald! I think some of this may be cultural too. In my family, my parents have been talking about finances to me since I was in elementary. Part of the reason was they were immigrants, and as a family all the kids had a duty to help translate. My parents didn't have alot of money, but it was always discussed on what responsible finances were. I think it might have been a little too much at my age, as I knew what I could potentially inherent, and the responsibility of that at a really really young age. 

Ironcially, they talked to me about the big things in terms of investing, career, business, entrepenuership, wills, estate planning, etc, but not the small things such as not taking on debt, responsible spending, etc. I actually had debt in my teens, and didn't get rid of it until my early 20's. 

For my parents, my siblings and I have done almost all of our parents will and estate planning. We have had all very frank discussions between the whole family about all the details.


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## crazyjackcsa (Aug 8, 2010)

Screw it, I stand by my 18. In the eyes of the law, you're an adult and can die in for your country. Good enough for me.

All the reasons to wait seem to come from people wanting to excise control on their money from beyond the grave. Forget that. My kids can blow it all, invest it all, whatever, I'm dead, they're adults, sink or swim.


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## Square Root (Jan 30, 2010)

crazyjackcsa said:


> Screw it, I stand by my 18. In the eyes of the law, you're an adult and can die in for your country. Good enough for me.
> 
> All the reasons to wait seem to come from people wanting to excise control on their money from beyond the grave. Forget that. My kids can blow it all, invest it all, whatever, I'm dead, they're adults, sink or swim.


i don't think your kids would thank you for this approach. if you care about their future and have more than a nominal amount to give, I don't believe your approach is the best.


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## Jungle (Feb 17, 2010)

I read a good article in MoneySense a few months back stating that. Parents using money to control their children for behaviour they want after their dead. -not saying this is wrong, but you could imagine people using specific control and details in their wills and trusts. They said some of it may be desires they were never able to fill, but want them filled through this control method. 

Really some people are never responsible with money, even after age 30, 40 or 50 . Gambling, CC debt, alcohol or other addictions can really take over. 

I know people in their 50's, good job, kids grown, etc, but still bankrupt and horrible with money.

In the millionaire next door, they determine that children who received hand outs from their self made millionaire parents, never really manage or invest their hand outs properly and become dependant on living off hand outs. 

So really, I may not matter. They say 1/3 of every family generation makes the money, next gets it, spends it all and the next is broke.


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## crazyjackcsa (Aug 8, 2010)

Square Root said:


> i don't think your kids would thank you for this approach. if you care about their future and have more than a nominal amount to give, I don't believe your approach is the best.


Good thing you don't think for my kids. Or for me. 

What your advocating is the continued infantization of your child, beyond the years when society deems them (for the most part) adults. They are all on their own, and you're holding back a tool until some abritrary age.



"Sorry son/daughter, your parents (who are dead and therefore are truly acting as a dictatorship) don't think you can handle this responsibility".

That's a pretty crummy way of looking at the people you raised.

I'm 30, and I remember what I was like at 18. No rose coloured glasses, I remember. Working part-time, going to college, juggling that with a relationship. I could've handled it. And I would have been some angry if my parents thought different.

Besides, they could rack up debt while they waited for the estate to come through. 

And really, what's the big deal? You're dead, maybe they blow it, maybe they don't, it doesn't have any bearing on you, you're worm food, or ash, or whatever.

Let go of the reins. 18. It's a good number.


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## humble_pie (Jun 7, 2009)

my, my. Someone must have frustrated jacks by withholding something when he was an infant. Frequently. Teasingly. Cruelly.

made him angry, did our jacks. He's still angry, is jacks.


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## donald (Apr 18, 2011)

I would see this scenario....18yrold (just lost a parent)depressed and emotionally hurting,peer presure high still along with still trying to fit in and be liked.

Dad leaves son with 650k,son starts throwing parties(remember 18?)he is putting on the party(bar tabs,expensive meals,ski trips ect)18yr olds looks up to eminiem or jayzee or whoever because thats where a 18yr olds head is @. Starts buying bling,goes out and buys a porsche or whatever because 650k is alot,next thing you know he is on coke and girls are using the dumbass(he blows his university tution)because he bought a "sick" loft with a amazing view.

3 yrs later,moneys gone(he is in debt)friends are gone,he is in rehab,and his porsche is beat-up because he didnt think to change the oil and stuff like that,and he is sitting a cross from a shrink lol.

Dad spent 45yrs building a nest egg and he was a regular guy...Son ripped through it in four yrs because he thought he was suppose to live the 50 cent lifestyle or some crap like that....thats not that far off.


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## crazyjackcsa (Aug 8, 2010)

That's pretty funny Humble. It isn't anger though, it's frustration. Each generation treating the next as bunch of empty headed teens.

The second point is, so what? So what if the kid burns through it, it isn't your problem or your concern. You're dead.

Raise your kids right. That's the primary issue. 

Donald: I lived through this scenario:

My wife was handed 25K at 18 years old. Here you are, no strings attached.

This wild and crazy teen slapped it in the bank, and THEN went to school ON HER DIME.

Then just 4 years later at 22, her grandmother died and she recieved about 12k. She went out and bought a car. A used 2000 Chrysler Intrepid. 

Never was this money seen as something that was deserved, or expecting, only as a blessing, and one that should be treated with care.

At 25 years old her and I had 100k in the bank, even though we had never made more than $12.50 an hour.

My point is you have to do the work BEFORE you die, not add strings for after.


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## Sampson (Apr 3, 2009)

crazyjackcsa said:


> So what if the kid burns through it, it isn't your problem or your concern. You're dead.


This is an interesting point, but what have my children done to even deserve getting the money I earned? Maybe I need to seriously think about donating my monies away or spending it all before I go.


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## crazyjackcsa (Aug 8, 2010)

Sampson said:


> This is an interesting point, but what have my children done to even deserve getting the money I earned? Maybe I need to seriously think about donating my monies away or spending it all before I go.


True that. It's your money, 'till your dead.


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## marina628 (Dec 14, 2010)

Think of this scenerio oldest kid gets money at 30 ,maybe you have been dead a while and your two youngest kids are scraping by and suffering waiting for their 30th birthday to tick by.This may cause issues with the siblings so I would consider this as well.
I have two kids 10 years apart so I have taken steps to protect my youngest but if i die tomorrow my 19 year old will get a lump sum of cash her entire inheritance.


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## donald (Apr 18, 2011)

I had a shirt in grade 6(1990) does anybody remember the clothes brand (no-fear) had the saying:he who dies with the most toys still dies,i wore that shirt like crazy lol same with my bum equipnment...those were the days lol.Sorry enter twitter,my bad.


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