“There are people who make things happen, there are people who watch things happen, and there are people who wonder what happened. To be successful, you need to be a person who makes things happen.”
– Jim Lovell
Hey Collin County Parents,
Who says nothing good comes from TV?
Last week, while my oldest daughter was visiting with her grandparents and exploring Mesa Verde, we had a (relatively) quiet week with our two younger girls. In fact, one day they were watching a Brady Bunch rerun – the one where Bobby and Cindy decided to try to break the world’s teeter totter record. Well, my two youngest girls decided they were going to have to break a record too. We don’t have a teeter totter, so they decided they were going to set the world’s record for not talking. Now I don’t know what the world’s record is – after all, aren’t there monks that have taken vows of silence and been quiet for years? – but the girls managed to stay quiet, absolutely no talking FOR 46 MINUTES!!!!! Unfortunately, they decided to do this while I was in the office, so I didn’t get to enjoy it, but my wife was LOVING IT! Those girls are too cute.
We are really having a great summer with them home, and I hope your summer is going well too.
This week, I’d like to share a great article from the Wall Street Journal that I recently came across.
“Straight Talk” Personal Strategy
Deciding if Your Kid Is Trust-Worthy
Adapted from ‘The Wall Street Journal Financial Guidebook for New Parents,’ by Stacey L. Bradford. Copyright 2009 by Dow Jones & Co. Inc. Published by Three Rivers Press, an imprint of the Crown Publishing Group.
Parenting is more than reading to your children or getting them to eat their vegetables. It’s also about securing their financial future. One way to do that is by drafting a trust and naming a trustee. In this excerpt from her new book “The Wall Street Journal Financial Guidebook for New Parents,” Stacey L. Bradford explains why parents may want to consider estate-planning tools beyond a will.
Here are a few questions to ask yourself to determine if a trust is right for your family:
Do you anticipate leaving your children more than a modest sum of money?
A trust may not be worth the effort if you think you’ll only be leaving a child (or children) $100,000 or less. On the other hand, if you’re leaving life insurance money to cover four years of school and you own a home, there’s a good chance a trust would make sense for you.
Do you want to have some say in how your children’s money is spent?
A trust allows you to restrict spending to basic support, including food, clothing, education and health care. This is something that can’t be done with a custodial account. If the custodian is a soft touch, he could end up lavishing your child with designer jeans and a fancy car, leaving very little left for the college years. Even worse, if the custodian is also the guardian, he could start writing himself large “support” checks to help cover his other expenses.
Would you prefer that your children not inherit the money when they turn 18 or 21?
If you think giving a high-school senior a large sum of cash is a recipe for disaster, then you should consider a trust. The ability to delay inheritance was the main draw for drafting a trust for Laurie and Greg Wetzel, a New York City couple in their mid-30s with three small children. Should something happen to both of them, they decided, their kids will each receive half of their inheritance at age 30, and the remaining amount when they reach 35. “Your 20s are such a transitional time that we don’t want our children to have significant financial decisions to make,” Ms. Wetzel says.
Do you want the money to be used for a college education?
If you specifically bought life insurance so that there would be enough money to help fund college in the event of your death, then you’ll definitely want to delay the age at which your kids inherit your money. Otherwise, your child could think a red Ferrari is a better investment than a crimson Harvard diploma.
Would you like your children to have recourse if their money is mismanaged?
One more benefit of a trust that you don’t get with a custodial account is that a trust is a legal contract; the trustee has an obligation to follow your directions and act in a reasonable and prudent manner. If the beneficiary feels the trustee spent the money frivolously, he can demand an accounting, and can sue for reimbursement if the trustee acted improperly with the funds. It may be pretty tough to prove illegal or improper actions with a trust, but just the threat of a possible lawsuit can keep someone in line.
To read the article in its entirety, go here: http://online.wsj.com/article/SB124397907698178821.html
I’ll leave these questions there, and will return in a few weeks to more. I hope they’re helpful…and feel free to forward this to your family and friends.
To your family’s wealth, health and happiness!