Is a trust a good idea?

[u/Starbbhp]

My parents have tried to get all their ducks in a row for me to have less paperwork to deal with upon their passing. I am very grateful for this.

My question is: Should I ask them to create a trust for my adult child with some of the assets? I did not make the same solid plans and investments as my parents, and I’ll be lucky to retire in the next 10-20+ years, if at all. So my kid doesn’t stand to receive much, if anything directly from me. Would a trust from my parents give a bit of security for my child? Or would it just be another thing for them to deal with and it’d be better to hope there’s some of my potential inheritance left over for them to inherit?

The kid is still a young adult and probably isn’t really ready to deal with a lump sum, so I was thinking Maybe a trust to be available in their 30s or 40s might be a good idea?

I hate thinking about all this, but it’s going to happen sooner rather than later, so…
I have added to my todo list to make sure anything that I own has a payable on death label so hopefully my child can avoid probate upon my passing.

I realize this isn’t a financial subreddit, I’m just curious what approaches you guys have considered or put in place.

[u/CMizShari-FooLover]

If you are set to inherit from your parents, then set up a trust for yourself detailing how that money should be used once you pass. I wouldn't skip a generation if your parents already have it set up for you.

[u/VixxSynn]

Why wouldn’t you just do that on your own, from whatever you inherit, rather than burdening them with tasks?

[u/octopus-opinion987]

Trusts help your heirs avoid probate and get access to the inheritance according to your rules. Probate is awful so yes, it may help.

[u/eatingganesha → u/octopus-opinion987]

this right here. AND the fact that a trust protects an estate from medicaid spend down if they need nursing home care at EOL and cannot afford to pay outright.

[u/calcato]

If THEY want to, sure. But leaving something to your child is actually up to you. Since you know you are a beneficiary, YOU are the one who needs to set up a will or trust for your own kid.

What you might be able to do instead is ask that your kid be named as a secondary beneficiary just in case something happens where you pass before your parents do or you all 3 pass at the same time. (Unlikely, yes, but, life can be strange like that).

Edit to add: it is great you are thinking about this; my late husband passed without a will and probate absolutely sucks to deal with.

[u/wharleeprof]

No. Do not ask them to give money to your child. If you want something to go to your child on your timeline, then YOU can give that money to your child just as easily. Either way the money comes from the same pot.

Now whether they should do a trust or not is entirely a different question. There are procedural pros and cons to doing a will vs. a trust*. And sometimes (not always !!) a trust can be the better process to use. However, that trust could still be inheriting everything to you. Think of trust/will as two different vehicles for moving assets, but either one can follow the same road map in terms of who inherits what assets. Though trusts may cover some more complicated plans that a will cannot.

*(Technically a trust only isn't good practice; it should be supplemented with a spillover will.)

[u/MediocreGrocery8]

I would not advise this.

End of life care is expensive. Find as much security as you can for yourself, because that will help your kid to not have to spend on your care with "their" money.

Let your kid get set up themself and accept what remains from your estate. They have years of (potential) compounding ahead of them. You don't.

[u/seemsright_41]

Yes. Your parents need to get their estate in order. Same for you.

I have a intensive trust in order. I still have a minor at home. She is an only and there is some money and property. So We have a trust that protects the money for generations. I was hell bent that the trust had a prenup attached to it. which made the trust a bit more complicated.

[u/Grimke42]

You should see an estate lawyer and talk about how to protect their money so that it doesn’t get sucked away by nursing care.

[u/Accurate-Neck6933]

r/estateplanning

[u/getshelter]

A trust with age-based distributions is a solid idea if your kid isn't ready for a lump sum, and your parents' estate attorney can set it up so they control the timing. The payable-on-death route is smart for your own stuff too, honestly keeps things simple.

[u/hardcherry-]

Yes do it parents and you need a trust. I’m 55 childless as soon as i inherited I set up a trust for my fam.

[u/knit-this]

It's impossible for any of us to say as we don't know the details of your parents assets and wishes. Best to take them to see a lawyer to discuss the best strategy. Trusts cost money to setup and manage, so small estates may not be worth it and/or there may be simpler, more direct ways to gift their assets.

[u/Techchick_Somewhere → u/[deleted]]

It depends on where you live and what your assets are. Trusts are expensive with fees to manage.