[Jule]

For those are in aiming to FatFIRE, how did you set up your estate plan to distribute funds to your heirs?

We are planning to do it in increments until our only child is 35 years old.

Still when I look at the overages in actually dollars I find it that even 10% is a lot for a young adult in their 20s.

I am curious to hear what others are planning to do.

[Daryl]

Our trust does the following for our kids:
1) Until age 25, the trustees are those we specified. After age 25, the kids can elect a successor or co-trustee to manage their portion along with who we specified

2) Before age 21, trustee can distribute income / principle to pay for the kids health, education, maintenance and support.

3) After age 21 in addition to the above, distribute net income in a quarter-annual basis.

4) At age 25, 1/3 of the principle released to the kids

5) at age 30, 2/3 of the remaining principle released

6) at age 35, all remaining principle released

[Alisa]

I’m an estate planning attorney with almost 20 years experience. This varies wildly by child. There are some 65 year olds that are 100% incapable, and some 16 year olds that would be fine with the lump sum.

Given that you are trying to fat fire and the estate tax laws are in total flux, I would highly encourage you to never make an outright distributions.

You can allow you child to be a co-trustee of their funds at a certain age and allow for sole trusteeship later, but there are too many potential protections to keeping the funds in a sub-trust (divorce protection, estate tax protection at second generation if trust is drafted properly, creditor protection) and the upkeep is minimal.

[Samantha]

We set up our trust to match our childrens income unless they are retired.

We wanted to make sure they just didnt live off of trusts like we have seen other people do who are our age.

Or wait for us to die

[Dion]

When I’m 75 I’m marrying an 18 year old.
They get everything.

But have to send pictures to my kids of all the fun ways they spent the money.

[Frank]

Yes, we had something like that set up when they were younger but revised it when they became adults.

Best thing to do is talk to your estates attorney as they will have experience with a number of options and it really kind of depends on the specific heirs you are dealing with, what state you are in, etc.

[Wendi]

Our primary goal will be to set them up similarly to what Alex described (helping fund Roth IRAs, etc).

But in our trust, we set the age at 27 with the ability for periodic distributions for HEMS (health, education, maintenance and support, including professional education) before that.

There is also a clause with the power to delay distributions by the trustee beyond 27 if it’s not in the best interest of the beneficiaries (legal incompetence, substance abuse, or other financial circumstances that could reduce their trust benefits like an upcoming divorce or lawsuit).

One of our kids may need a special needs trust set up so we’re going to need to revisit this and update our docs accordingly.

And I’m sure we will revisit it again when they are adults.

[Bob]

When we set up our documents, the lawyer asked us what we would want to do if our children didn’t survive us. That took us by surprise and we spent some time thinking of charities we would want our assets split up to.

We liked that.

When we met with our children, 21-18-17, to go over our documents, we told them that we are splitting everything 3 ways for now but if things go well and they get settled and are doing fine, we will add in charitable gifts into our main distribution.

You don’t have to pass everything on to the kid.

[Adam]

IIRC mine is 1/3 at 25, half of remaining at 35, remainder at 40. Trustee can disperse for things like education before that.

[Kevin]

Many people chasing fatFIRE don’t plan to hand out money like that. Often the intention is to allow for more travel, or to live in a high cost area, or such things.

[Mikean]

We just sent in our estate/trust documents today. We have 4 kids, who would inherit 1/4 in thirds, age 25, 30 and 35.

If there are still minors in guardianship care then they won’t inherit until the last child turns 25.

[Jake]

I’ve been working on my plan and I’m planning on the opposite. Distributions start at 35 years old.

[Karen]

Question related to this- any suggestions for a flat fee estate planner/legit software/app?

[Steve]

Just for my understanding, are we talking about kids getting those sums when parents are alive or when both parents are deceased?

If when parents are deceased, then it’s quite possible the kids will be in their 40s-50s and should be mature enough to handle any sums.

[Christina]

I had a trust fund from my grandparents that started paying out at 18, 25 and lump sum at 35. My inheritance from my parents came upon their passings.

I am donating everything to charity when it is my time.

[Author]

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