[11:29:35 AM] pD says: am doing trust/will for my kid
[11:29:42 AM] pD says: it is painful and tedious like doing taxes
[11:30:10 AM] pD says: but, i also find it almost "therapeutic" in forcing a deeper look into life.
[11:30:29 AM] pD says: not sure i would recommend the exercise for that reason, but, it is a bonus
[11:31:16 AM] pD says: things like how to maintain life support and such. really gets you (me) thinking...
[11:32:29 AM] AE says: I've done it three times now
[11:32:45 AM] AE says: one for each child, and a joint trust for our estate.
[11:32:47 AM] pD says: trust/will?
[11:32:58 AM] AE says: three trusts, one will.
[11:33:11 AM] pD says: oh, why do you need separate ones for each kid? wouldn't one be enough?
[11:33:21 AM] AE says: they each have a separate tax ID.
[11:33:35 AM] AE says: so the income counts against their tax, not ours.
[11:33:50 AM] AE says: if we lumped them together, the tax would be much higher.
[11:34:04 AM] pD says: so, you pre-parcel out to each kid? i think our setup is to centrally administer and they get equal pay-out
[11:34:18 AM] pD says: is that a bad idea? what else do i need to think about?
[11:34:24 AM] AE says: is this an inheritance trust?
[11:34:41 AM] AE says: are you creating the trust so when you die all your assets are held in trust?
[11:34:55 AM] AE says: if so, then that is different than what I’m talking about.
[11:35:21 AM] AE says: we have trusts for each child to receive when they are 21; to pay for college, house, business, whatever.
[11:35:30 AM] AE says: then we have a separate trust for our estate.
[11:35:34 AM] pD says: yes - assets are held in trust for the benefit of children and there is a pay out schedule
[11:35:51 AM] AE says: Right. to defer death tax
[11:36:00 AM] pD says: Are you referring to the UTM thingie for each kid?
[11:36:08 AM] AE says: what is that?
[11:37:07 AM] AE says: unified threat management? University of Tennessee at Martin?
[11:37:19 AM] AE says: Underwear Tying Monkeys?
[11:37:33 AM] AE says: Unique Tickle Machine?
[11:37:48 AM] AE says: Understanding Transverse Mechanics?
[11:38:05 AM] AE says: Utilizing Topographical Marsupials?
[11:38:07 AM] nsy says: under the mountain?
[11:41:36 AM] pD says: hmm...
[11:41:40 AM] pD says: for the life of me, i cannot find it
[11:41:55 AM] pD says: it is a simplified trust that is accepted all 50 states
[11:42:14 AM] pD says: it requires minimum paperwork but has a payout at 21.
[11:42:32 AM] pD says: usually set up by grandparents/parents to fund education
[11:45:07 AM] pD says: just out of curiosity, wouldn't the estate trust be able to handle the education, housing, etc. for all the kids? Is there a particular reason for doing 4?
[11:49:20 AM] AE says: well, one is a trust/will. a standard revocable trust.
[11:49:27 AM] AE says: that one is not paid out until we die.
[11:49:41 AM] AE says: the other two are held for our children until they turn 21.
[11:50:11 AM] AE says: we pay tax on the children's ones every year so when they receive them there is no massive loss to taxes.
[11:51:11 AM] AE says: and we're being sneaky about it.
[11:51:25 AM] AE says: not telling our children until they receive it.
[11:51:43 AM] AE says: that way, they still work hard to earn admission to college, scholar ships, etc.
[11:51:48 AM] pD says: you are very kind
[11:51:59 AM] AE says: It makes life hard when you know you don't really have to work for a living.
[11:52:06 AM] pD says: for us, we are hanging onto our money - so, kids need to be nice to us. :)!
[11:53:31 AM] AE says: so your trust is to hold your estate until you die, then pay it out to your beneficiaries?
[11:53:35 AM] pD says: but, seriously though, we plan to help our kid as much as possible. But, 21 does feel a bit young
[11:53:56 AM] pD says: of course, i did not feel that way when i was 21, but that is a separate story
[11:54:42 AM] AE says: i'm having my son manage his to some extent now.
[11:54:53 AM] AE says: that way, when the time comes, he will be used to doing it.
[11:54:55 AM] pD says: trust holds estate - we have full control over it - so we can give it out anyway we like. once we die, there is a pay-out schedule and conditions - so, kids still would not get a free ride
[11:55:05 AM] AE says: perfect.
[11:55:10 AM] pD says: i can be a bit of an asshole that way, i guess
[11:55:12 AM] AE says: that also minimizes the death tax.
[11:55:16 AM] AE says: no... it's smart.
[11:55:28 AM] AE says: also, prevents fights when you die.
[11:55:39 AM] AE says: as long as you and your wife are joint trustees.
[11:56:06 AM] pD says: actually, unless i die too soon, i plan to spent every cent that i've got. after all, i earned them
[11:58:00 AM] AE says: I figure the only way my kids are going to live better than me is if I help them.
[11:58:17 AM] AE says: that means making them better people, and then giving them financial advantage as well.
[11:59:32 AM] pD says: what constitutes a financial advanrage though?
[12:01:33 PM] AE says: you're typing with an accent.
[12:02:00 PM] pD says: cramped keyword or fat fingers, really
[12:02:13 PM] AE says: ah... yeah, that keyboard of yours is really small.
[12:12:16 PM] AE says: financial advantage = any extra money to get them started.
[12:12:37 PM] AE says: enough to pay for college or purchase a house or business.
[12:53:01 PM] pD says: wow! those are real money - a house in the silicon valley can be quite expensive - even if the house does not feel that way...
[1:11:26 PM] pD says: found it! Uniform Gifts to Minors/Uniform Transfers to Minors Accounts (UGMA/UTMA)
[1:11:33 PM] pD says: http://personal.fidelity.com/global/search/inquira/resultsindex.shtml?question=Uniform%20Gifts%20to%20Minors
[1:18:10 PM] nsy says: since i'm over 18, my mom just added me to her accounts so there is no estate tax taken out when she leaves. the only hassle is that I have to sign the papers any time she makes changes to her accounts. its a small price to pay.
[1:21:22 PM] nsy says: my father did not leave a will or anything and it was a total mess. in the end, the estate tax and lawyer fees were unreal, not to mention the time it takes to get everything sorted out, and the stress of arguing about what is best. i'm glad people are becoming more aware of these things and getting trusts.
[1:21:32 PM] nsy says: your children thank you!
[1:32:07 PM] pD says: yeah, that is part of what we want to avoid - all the family in-fighting. not that we are worth that much, but it is better that way
[1:32:49 PM] pD says: also, as part of the practice, it was good to talk about some of the issues that do not often enter typical conversation such as funeral arrangements
[1:33:42 PM] nsy says: yes, that was a big argument - one sister wanted a military funeral, one didn't, etc. gets very emotional.
[1:34:17 PM] nsy says: people want to cling to the material items they did not previously care about, too, so divvy up your stuff!
[1:34:29 PM] nsy says: no matter how small
[1:35:10 PM] pD says: but, that is also kind of tedious - who gets which picture, for example
[1:35:33 PM] pD says: actually, if you do not mind talking about it, how was it addressed eventually? in terms of divvy up things?
[1:43:54 PM] nsy says: no peaceful solution was found, so most of the stuff was donated or sold, and the heirlooms went to aunts and uncles. hopefully they will have wills.
[1:44:40 PM] pD says: sorry to hear that, that must have been a very difficult process
[1:45:03 PM] pD says: having gone through it though, what would you recommend? itemizing every physical possession seem a bit unrealistic
[1:47:39 PM] nsy says: yes, that is difficult. no perfect solution. but I guess I would ask the people I love if there is anything they specifically want if I die, then write that into the will. appointing an executor who is willing to be the "bad guy" would be a good solution - someone who you trust to be impartial and fair.
[1:49:38 PM] nsy says: otherwise, specify certain groups of items, and specify a "taking turns" choosing approach. So, if you have a collection, you can say person 1,2,3 choose an item, and repeat the cycle. for clothes, music, etc.
[1:50:29 PM] nsy says: i also sometimes think it would be nice to say - "if you gave it to me - you get dibs" or sumthin' simla
[2:50:01 PM] pD says: actually, i think this creates a very interesting auction situation that a proper "game" setup makes all the difference
[3:15:39 PM] nsy says: after my experience, i thought about starting a non-profit to help people deal with these things. i found that it is very helpful in taking stock of your life when you "get your house in order" preparing for death. maybe the egyptians had some good ideas there
[3:17:22 PM] pD says: Nolo is great with this. but, it takes initiative from the person: http://www.nolo.com/resource.cfm/catID/FD1795A9-8049-422C-9087838F86A2BC2B/309/
[3:20:41 PM] nsy says: good info on that site - thanks
[3:37:21 PM] pD says: we should design a set of game rules that would allow the heirs to pick "stuff" and still remain friendly afterward
[3:42:04 PM] AE says: the way my family did it after my grand ma died, and again after my mom died was this:
[3:42:25 PM] AE says: You first get to claim any item you gave to the deceased.
[3:43:20 PM] AE says: For the remaining stuff each person gets a roll of colored dots. Go around the house and place dots on anything you want.
[3:44:17 PM] AE says: If multiple people put dots on things, then bring them into a room with the people interested. they then trade things: "Ok, you can have the painting if I get the vase" kind of stuff.
[3:44:21 PM] AE says: it worked very well.
[3:45:41 PM] AE says: the only problem they has was my grandma's paintings: she had done quite a few, but the ones of the old place in Kansas was quite popular. They eventually decided it was best to share it: each person displays it for a year, then wraps it under the christmas tree and gives it to someone else.
[3:49:08 PM] pD says: that sounds like a very workable solution
[3:49:23 PM] pD says: a few questions though, this may or may not have been a problem for you guys.
[3:49:42 PM] pD says: how do you prove that you give something to the deceased
[3:50:41 PM] pD says: does each claimant have the same standing? so, that there is no preference for uncle and aunts, for example
[3:50:52 PM] pD says: finally, what happened to the stuff that nobody claimed?
[3:51:17 PM] AE says: the stuff no one claimed was donated to the salvation army.
[3:51:47 PM] AE says: as for the other one... why would you need to prove it? if you gave it to them you can claim it. if you didn't give it to them then you have no claim.
[3:52:03 PM] AE says: if you claim it but didn't really give it to them then you're a schmuck.
[3:52:24 PM] nsy says: if two people say they gave something to you, the executor hears them out and decides. or the dot thing, or names in a hat, or my personal favorite - everyone has to Reaux Sham Beaux
[3:52:30 PM] pD is a schmuck
[3:52:41 PM] pD says: but, that is how you (I) can game the system
[3:53:00 PM] AE says: someone has just died. if you're looking to game the system.. .then you really need to re-think your priorities...
[3:53:31 PM] pD the schmuck again
[3:54:10 PM] pD says: i agree with your emotional description, but i have seen plenty of family spend more time fighting over stuff than bereave. sad, but true
[3:54:30 PM] nsy says: most people are not as emotionally mature as your family, AE. they will run higher on emotion than rationality, so the more decisions that are made for them, the better. Reaux Sham Beaux
[3:55:45 PM] nsy says: my sisters love each other, but they didn't speak for almost 3 months over the bed. then they realized it is silly, and gave it to a third party. if someone had made the decision for them, their angst could have been directed elsewhere, sparing an unnecessary rift.
[3:56:18 PM] nsy says: my description about running high on emotion refers to people who are grieving - not in general
[3:56:34 PM] pD says: to throw in another wrinkle, for the items that are high value and need a certainly maintenance and wanted by multiple people. what do you do?
[3:57:00 PM] nsy says: liquidate
[3:57:15 PM] pD says: in other words, if there is a painting that should be kept in a dry environment but one person wants it but cannot maintain it
[3:57:35 PM] pD says: so, majority rule?
[3:57:59 PM] nsy says: if the vote is anonymous
[3:58:18 PM] pD says: how about throw in the first right of refusal so that the person who really wants it can buy it
[3:58:48 PM] pD says: oh, i don't like the anonymous voting part - there are too many ways to game the system by forming cliques
[3:59:02 PM] pD still the schmuck
[3:59:54 PM] nsy says: but its better than having everyone hate each other for being voted against - then instead of cliques, you have "sides"
[4:00:24 PM] AE says: i say donate it.
[4:01:08 PM] AE says: some museum out there would love to have it, it would make a great tax write off against death tax, lots of people can see it, and you can have a plaque that says it was donated by your family.
[4:01:40 PM] AE says: that's what my grandfather is doing with my grandmother's multimillion dollar Hummel collection.
[4:02:03 PM] AE says: There is a museum in Tyler TX that has a few but was looking for a complete collection. Volia.
[4:03:01 PM] AE says: Now my grandfather gets rid of a massive collection and gets a huge tax write-off; the museum is happy, and the collection is well cared for and on display for everyone.
[4:03:07 PM] pD says: who is hummel?
[4:03:31 PM] pD says: so, what is the thread hold for donate/liquidate an item?
[4:03:38 PM] AE says: this decision was made before my grandmother died... so I recommend doing the same for any large ticket items: have them explicitly laid out in the will...
[4:03:45 PM] AE says: hummel are figurines...
[4:04:56 PM] AE says: http://www.mihummel.com/
[4:05:00 PM] pD says: how about creating an internal auction process and whoever bids the highest gets the item. and, the proceed can go to a pre-designated charity or some such
[4:05:03 PM] AE says: I don't know what the threshold is.
[4:05:57 PM] AE says: what kind of stuff are we talking about? Is this a lot of high dollar stuff?
[4:06:19 PM] AE says: if so, you can liquidate it in auction, public or private, and either split or donate the proceeds.
[4:06:36 PM] AE says: that incurs additional expense, though.
[4:06:48 PM] AE says: and work of getting everything ready for auction.
[4:07:03 PM] AE says: you're better off getting a clear will/trust in the first place.
[4:07:06 PM] AE says: or better yet...
[4:07:13 PM] AE says: NOT have really expensive things!
[4:07:19 PM] AE says: that would be the best solution.
[4:07:43 PM] AE says: that's what we're going for here.
[4:10:38 PM] pD says: oh, i am just posing all the hypothetical questions. you know, try to see what are the kinks and how to game the system. mind experiment if you will
[4:11:54 PM] pD says: how do we take into account if somebody really really cares for an item whereas another member may just want the item for its monetary value? auction may fetch higher prices, but does it make the family happier?
[4:13:01 PM] AE says: our only large possession is property. once we die, that will go into reverse mortgage paid off to the children (unless they are under 18, then the grandparents or trustee takes over until the kids are of age.
[4:13:52 PM] pD says: that is an interesting idea on reverse mortgage. why not just sell it and split the proceeds?
[4:14:05 PM] AE says: taxes
[4:14:23 PM] AE says: if you sell it you have to pay tax on it unless you use the proceeds to purchase another house.
[4:14:45 PM] AE says: if you reverse mortgage it, the income from it is spread out over the term of the mortgage.
[4:15:01 PM] AE says: of course, at the end either the bank gets the house or the kids have to buy it back.
[4:15:09 PM] AE says: so... there goes the family homestead.
[4:15:26 PM] AE says: but, what child is going to want to stay in the house their parents built?
[4:16:10 PM] AE says: as for the emotion/monetary angle... I don't know a good solution there... look in your heart for the answer...
[4:16:26 PM] AE says: attachment is the root of all evil.
[4:16:36 PM] AE says: attachment to money, to things, to people...
[4:16:43 PM] pD says: that is why i strive to spend everything i have got to spare my heir the agony
[4:16:53 PM] AE says: all of us can stand to practice non-attachment.
[4:17:07 PM] AE says: especially during that time!
[4:17:13 PM] AE says: heh
[4:18:19 PM] pD says: well, technically, if the property is willed, the cost basis gets step up for the heir, so the tax consequence should be minimum, unless it is a really big house. this seems to give the heir more options - if they want to keep the house, for example
[4:43:32 PM] AE says: but if there are multiple heirs that may not work. They would want to either liquidate it to split the value, or one would have to buy the other out.
[4:44:23 PM] AE says: and any house in California these days is some serious value (ours is presently 3-4 times it's original value).
[4:45:06 PM] AE says: so if the property is willed, you need to ensure there are adequate liquid assets to offset the value for other siblings.
[4:45:14 PM] AE says: that can be tricky with the changing markets.
[4:45:22 PM] AE says: so the best bet is to liquidate it.
[4:45:35 PM] AE says: and the best way I've found to do that is to reverse mortgage it.
[4:45:53 PM] AE says: my logic often paints me into these situations were I have no free will.
[4:45:59 PM] AE says: same reason I drive a prius...
[4:46:21 PM] AE says: would rather have a WRX STI or Porche Turbo AWD.
[4:46:33 PM] pD says: free will is over-rated - deterministic world view is much more comforting
[4:46:37 PM] AE says: but that would not be the logical choice.
[4:46:50 PM] AE says: how so?
[4:47:16 PM] pD says: your logic definitely makes sense - on the house anyway, i don't know about your car choices - personally, i would prefer a bentley
[4:47:47 PM] pD says: but, it (ref: house) does beg the question, why make the determination today as oppose to letting your heir decide?
[4:50:32 PM] nsy says: because you might get into a situation like the one i had where I wanted to keep the house, and my sisters wanted to liquidate. I didn’t have enough money to buy them out, so we sold it under market value to get the estate stuff done with. that was 2001. the house has almost quadrupled in value since then. but no for us... then again, it is a unique market situation. can't bet on that happening again - but you never know.
[4:51:41 PM] nsy says: if it was legally determined, at least i wouldn't have to fight the urge to say "i told you so!"
[4:53:01 PM] pD says: i hear you. but, in the context of the reverse mortgage, you would have "sold" the house anyway. of course, you do retain the upside option of buying it back should the value goes up. You may not have thought of this option back then, but, had you known, you probably would/should have gone with that route
[4:53:33 PM] pD says: so, my point is , since we are talking about options - why lock in so early if it is just a question of making sure that the heirs are properly informed?
[4:55:07 PM] nsy says: 1 - you never know when you’ll go and 2 - people don’t think straight when they lose a loved one, so you have to think it out before then. or maybe i didn’t understand your question...?
[4:56:31 PM] pD says: that is a fair point. so, i think one of the to-do's is to get enough life insurance and estate planning in order so that the heir have time to think instead of being rushed
[4:56:57 PM] AE says: get the big items sorted out at least.
[4:57:15 PM] pD says: and, assuming that there is a bit of breathing room in terms of timeframe for reflection, research, etc., would that help?
[4:57:48 PM] AE says: usually these things happen all too fast.
[4:58:05 PM] AE says: often everyone gets together for the funeral and wants to do it all then.
[4:58:08 PM] AE says: bad idea.
[4:58:25 PM] AE says: the law gives you 6 months before you need to execute the will and donate items.
[4:58:42 PM] AE says: you have 1 year from the time of death to reconcile real estate.
[4:59:22 PM] pD says: that is very interesting about the time line. are they california specific or nation-wide?
[4:59:39 PM] AE says: i'm not sure. I know it was true in Colorado and Texas.
[4:59:55 PM] AE says: oh, and california, so it's probably a federal rule.
[4:59:56 PM] pD says: i should find out
[5:00:10 PM] AE says: having kids does this to people.
[5:00:30 PM] AE says: Quinn was about 12 months when we got our trust/will, living will, and trust funds set up.
[5:00:46 PM] pD says: if it wasn't for the fact that my kid is so darn cute, it just ain't worth it
[5:01:01 PM] AE says: that's why nature makes them that way.
[5:01:31 PM] AE says: so at 3am when he's screaming and projectile vomiting you don't stick him in the freezer...
[5:01:43 PM] AE says: not that that would ever happen.
[5:01:45 PM] AE says: or did.
[5:01:49 PM] AE says: not.
[5:01:54 PM] AE says: you know what I mean.
[5:02:06 PM] pD says: freezer is too full with frozen breast milk anyway. he would not fit
[5:02:33 PM] pD says: no fighting mother nature there
[5:03:20 PM] AE says: ah... I miss those days...
[5:03:38 PM] AE says: we just tossed the last of the swim diapers and gave away the potty equipment...
[5:03:47 PM] AE waxes nostalgic
[5:03:49 PM] pD says: psycho!
[5:04:04 PM] AE says: eh?
[5:04:11 PM] pD says: missing those days...
[5:04:33 PM] pD says: rather masochistic, wouldn't you say
[5:05:42 PM] AE says: you'll get there some day.. .trust me.
[5:07:29 PM] pD thinking out loud - somebody is showing an awfully lot of attachment
[5:12:37 PM] pD says: btw
[5:13:16 PM] pD says: as an aside, thank you for sharing your experiences. i have been thinking about it
[5:13:30 PM] pD says: but, it is good to do a sanity check with reality and people who have gone through it
[5:14:10 PM] AE says: of course! always happy to inflate my ego at the expense of others!
[5:18:39 PM] nsy says: late with this comment - didn’t want to interrupt your nostalgia - anyway....a non-financial example of why you need to decide everything ahead of time: it was a big rush, and we scattered all of dad's ashes at the service, then later wished we had parceled out some of them to the other loved ones, and retained some to scatter during our world travels... there was also limited room on the boat for the scattering, and since it was not pre-determined who would go, we all had to awkwardly decide at the moment of departure, and some pushy people that were not even family took the place of family on the boat. please decide everything for them so they do not have to deal with that stuff. i still feel a little guilty about pushing them overboard ;-}
[5:19:17 PM] AE says: *snicker*
[5:20:05 PM] AE says: true though. after the death comes planning the funeral/memorial. At that time people often want to divvy things up.
[5:20:42 PM] AE says: my mom's death was kind of like that, except we had all been through so much together watching her struggle that it never occurred to any of us to act in a way that was not beneficial to the whole group.
[5:20:53 PM] AE says: altruistic, perhaps... but it's what happened.
[5:21:16 PM] AE says: I still have un-scattered ashes to deal with. but it's kind of nice having them around.
[5:21:34 PM] AE says: we put some under the fruit trees we planted this year.
[5:21:48 PM] AE says: and i sprinkle some on runs through areas my mom would have loved.
[5:24:47 PM] nsy says: maybe you can bake her into a cake? sorry - maybe thats morbid. i sometimes rub people the wrong way with that stuff.
[5:24:58 PM] nsy says: in your case i'm sure its the wonderful influence your Mother had, and how great your family is. and in other cases, maybe when you know that someone is sick, and there is a possibility of loss, you begin to process these things early. but when it is a surprise like it was for us - there is so much more potential for craziness (i think).
[5:25:24 PM] nsy says: or maybe we are just a-holes
[5:28:49 PM] nsy says: it would be nice to be planted under fruit trees that your family will eat from - and maybe a rose bush or two. or a redwood tree. ahhh
[5:29:00 PM] nsy says: you had some great ideas there
[5:29:40 PM] AE says: we could bake her into a cake we make with the apples picked from the tree growing over her ashes...
[5:29:52 PM] AE says: wonder what ashes would taste like...
[5:30:46 PM] AE says: or we could do something else with them: http://news.bbc.co.uk/2/hi/entertainment/6524661.stm
[5:30:54 PM] AE says: but we don't do drugs...
[5:32:39 PM] nsy says: hahaha - classic!
[5:33:07 PM] nsy says: ok, i'm outta here - thanks for the brain food. this is good stuff!
[5:34:24 PM] AE says: me too. night all!
==
NSA Chatters crew
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