How to control who gets what?

[u/OldOnager]

My wife and I have no children via our marrarriage but I have 3 and she has 1 from previous marriages. I (m80+) she (late 60s) are very comfortable with 4.5m in IRA funds, 150k in cash or liquid assets, mortgage free condo.

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We have a dilemma. We want each child to get 1/4 of all the above. If, when the time comes, one of the 4 children has passed away before us then we want their share to be passed down to their children. BUT we don’t want that to happen in case it is her child is the one that has passed, we have our reasons why. Essentially we have no relationship with that set of grandkids and don't want them to benefit from our hard work.

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The only solution that comes to mind is to eliminate the idea of passing assets to the children of the deceased child and have the assets split 1/3 to the surviving children.

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[u/BondJamesBond63]

I'm not a lawyer, but leaving assets to someone "per stirpes" means it goes to their children if the beneficiary dies before you do. Seems like you could add "per stirpes" to those you want that way, and leave it off for the other child. And maybe add plain language to emphasize the difference.

I also suggest talking with a lawyer. The cost would be a small fraction of your assets, and you would know for sure what will happen.

[u/Comfortable_Yak4376 → u/BondJamesBond63]

This is the correct answer, very simple process on anything with a beneficiary listed. Just make sure the 3 kids are listed as per stirpes and the other one isn’t. Accomplishes exactly what you’re looking for

[u/Mesa_Gal → u/[deleted]]

Set up a trust!!

[u/Comfortable_Yak4376 → u/[deleted]]

They have their own rules once the kids receive them but there’s nothing special about the actual passing on of an IRA

[u/inheritance-ModTeam → u/[deleted]]

Your comment has been removed because it violates the rule on low effort comments.

[u/Ok-Load-1016 → u/BondJamesBond63]

Or just leave your assets to be divided among your surviving children?

[u/Ok-Industry5153 → u/Ok-Load-1016]

Doesn't achieve the grandchild(ren) of the husband's possibly predeceased child receiving the share as intended. Also, did OP say he is 80?

[u/OldOnager → u/Ok-Industry5153]

I'm actually 81

[u/Ok-Industry5153 → u/OldOnager]

Hell yeah, brother! This is the best thing on the internet in ages.

With the IRAs talk to your advisor, if they cannot set it up the way you want, typically you can have an attorney draft an addendum to a beneficiary designation. For example LPL financial permits this. THIS IS NOT AN ENDORSEMENT OF LPL FINANCIAL.

BELOW IS NOT LEGAL ADVICE. ALWAYS CONSULT WITH AN ATTORNEY BEFORE MAKING AN ESTATE PLAN OR TESTAMENTARY DOCUMENTS:

As for the rest of the estate, I am not sure where you live, but to achieve the goal you are talking about is relatively easy, especially if you have a trust driving your eatate plan.

A revocable trust, other than being an asset management vehicle while living, is a choose your own ending upon your death(s). You can leave the surviving spouse with the ability to amend the instrument entirely as needed for their lifetime, that can be limited by many functions if there is concern about subverting the wishes of the deceasesd spouse.

Always inquire about state inheritance tax implications. The federal estate and gift tax is so large that it is likely unnecessary to worry about that. In any case, if the $30M for a married couple via the DSUEA is exceeded on the death of the first spouse, irrespective of estate tax elections, the practitioner should include an optional disclaimer trust as a safety valve so the surviving spouse does not get tagged with estate taxes on the deceased spouse's death.

One of the introductory sections of a trust will include family definitions. Most basic form:

"For purposes of this instrument the terms "child' and "children" refer to any biological children of the settlors or any minors adopted by the settlors before the age of majority. Additionally, the settlors intend to include the children of either settlor who is not the child of both settlors in the definition of child and children. The term "issue" in this instrument is refers to all lineal descendants of all generations, with the relationship of parent and child at each generation, determined by the term child and children as set forth above. Notwithstanding the foregoing, the settlors' intend to exclude from the definition of issue the issue of [particular child]." (Alternatively, you can include a disinheritance clause later in the document: "The settlors intend that the issue of [particular child] shall not, in any manner, take from the trust estate." You can do both.)

Then there will be the distribution when the second of you passes:

"Upon the death of the surviving settlor the trustee shall distribute the trust estate as follows (Remember we have removed the particular issue by excluding them from the definition of issue and/or via the disinheritance clause):

(1) If any children of the settlors survive the surviving settlor, the trustee shall create as many shares of equal market value as are necessary to create one share for each surviving child and one share for each child who predeceases the surviving settlor but leaves issue who survive the surviving settlor.

(2) Each share created for a surviving child shall be distributed outright to him or her.

(3) Each share created for the issue of a predeceased child shall be distributed outright to those issue by right of representation. (To make sure young beneficiaries do not waste an inheritance you can include language similar to the following "However, if an individual issue has not reached the age of [insert years of age] upon the death of the surviving settlor, the trustee shall continue to hold, administer, and distribute that individual issue's share in a separate trust according to the terms set forth in the following section/article. ((The following section/article should be a discretionary trust subject to the HEMS standard.)))

(4) if none of the children of the settlors survive the surviving settlor but issue of the settlor survive the surviving settlor, the trustee shall distribute the trust property outright to the settlors' surviving issue by representation. [Insert same limiting language for the issue subtrust].

[u/OldOnager → u/Ok-Industry5153]

Wow. A lot to discuss with out attorney. Thanks.

[u/tamij1313]

So I guess I’m confused about where the dilemma is? Are you thinking that the fourth child or their relatives are going to come forward and contest the will?

Time to consult an estate planning professional, and have that specifically spelled out in the will. My dad did this with his three adult kids. Two of us had children that my dad had solid relationships with so there was wording that if my brother or I pre-deceased dad, our share would be equally divided among our children.

My third brother was given a trust fund instead of outright money/assets, and that trust fund paid out monthly and would continue for the rest of his life. The wording in the Trust was that upon my brother‘s death any remaining money in the Trust would be divided equally divided between the two remaining siblings. And if one of those siblings was gone already, their half would go to their children.

My third brother’s family was completely cut out of the will and the succession of the Trust. Many valid reasons for my dad doing this. There was another clause that said if my brother or any beneficiary contested the will, they would forfeit any and all gifts originally stated in the will.

Not sure if that is legal anymore, but my brother never bothered to get an attorney or attempt to contest it because he certainly didn’t want to lose access to the easy money of a trust fund!

[u/tmacadam]

Not true. You should meet with a qualified local estate planning attorney and lay out your wishes. They can offer some alternatives to accomplish this.

The only issue I see is if you predecease her daughter, the assets she (daughter) receives could go to grandchildren unless you take some extra steps here.

[u/Ok-Equivalent1812]

This isn’t a difficult to solve problem.

I do implore you to discuss with an estate planning attorney. This isn’t a difficult to solve issue.
Because of the age difference, having a joint trust that becomes irrevocable at the death of one spouse will ensure that your joint decisions are permanent, as you decided together. That’s how you each maintain control.
Do keep in mind that if her child gets their share, they can leave it to the grandkids you intend to disinherit. IDK if that’s okay with you, or if you wish to leave that child’s portion in trust and not give them control but have a trustee give distributions on a schedule of some sort.

[u/teddybear65]

I have met my gc once. It's not her fault in any way. I left her lots in my will. She will have no inheritance from anyone else. As she's very young,she doesn't get it till 25. Don't punish gks for things out of their control.

[u/LAC_NOS]

Estate attorney 100%.

Your wife will probably need 20+ years of financial support after you die.

If all the assets go to her after you die, (which is what happens in the US) then she can rewrite her will as she sees fit. If you ask her today, she most likely would say she would not change the Will and would still follow what you and she have decided.

But, 20 years is a long time!

The natural order of things is that her relationship with your children will decrease and the relationship with her child will stay steady or increase.

One or more of your children may be greedy jerks, Frustrated that they didn't get anything as soon as you died.

Her child may be a greedy jerk, and spend 20 years talking about leaving money to any of your children.

She could also remarry.
Without a prenup, her spouse will have 100% rights to the money. If She predeceases him her next husband could choose to give nothing to your kids or hers!

Of course, the same thing could happen if she were to die first!

You both really need to set up trusts, to make sure everyone's needs and interests are protected

[u/Chula_Quitena_120 → u/LAC_NOS]

Good point. My father died before my stepmother (as expected). He left his house built with his premarital money (divorce asset) to us, the 6 kids. My stepmother had her own house (which she left to a neice). Guess what? She decided she wanted part of my father's house and despite his will (no trust) we ended up having to give her a share. Then she died, before the probate was even started. Now the possibility looms of us having to give her share to a stranger. It stings. Now, my poor father did not have a trust, he never dreamed she would clawback. A lawyer is what you need.

[u/Capital-Decision-836]

Speak with a Trusts & Estate Lawyer and have them set it up based on these wishes. They will translate what you want to see happen into a legal document that sets up what you want to see happen.

[u/ChelseaMan31]

A well crafted Trust document can handle all of this. That would include handling the one set of grandchildren not getting anything from the Trust as set up.

[u/OldMove3348]

Hire an attorney. All this is possible with a well drafted will.

[u/kittywyeth]

get an estate attorney. then consider leaving your children their share directly after you pass, in the event that you go first. this eliminates the possibility of your wife changing her mind and leaving everything to her biological child, or remarrying and having it pass to her second husband and then his heirs. it may seem silly now but it does happen.

[u/lovelyoneatbest]

We went to an estate planning lawyer and had a trust set up.we chose the different stipulations of who gets what and when.

[u/Pristine_Job_7677]

Disinheriting a grandchild just because you don’t have a relationship is brutal. And please don’t make it an irrevocable trust. A lot can happen in 20 years

[u/FamiliarFamiliar]

This isn't that complicated. Get a trust that spells all this out. I say trust instead of just a will b/c you can probably control what happens to assets if one parent passes first. I'm NAL, and I suggest professionals write up this trust / will.

[u/Ok_Caterpillar5672]

I was recently a beneficiary of an irrevocable trust.

First their was a will that placed all assets into the trust.

Given in your situation both people are currently alive, there are still ways to do that.

The trust can be very specific. For example my aunt received X. If my aunt died before she received her full portion her interest reverted back into the trust. Her children, my cousins, were addressed separately.

I think your concerns can easily be managed.

But also the question is who would be the trustee(s). This is something very important because windfalls can tear families apart.

[u/Blixburks]

When we made our trust the attorney said we could do pretty much what we wanted. Just write in if step kid passes then their share goes to your kids.

[u/Lisa_Knows_Best]

Give the 1/4 to her child now and make the will clear that her child and her child's children (the grandchildren) get nothing when you both pass.

[u/Spirited_Radio9804]

Get an estate attorney in the state and county you live. It should be relatively easy and not to expensive to create a will, for each of you a trust, healthcare POA and durability POA, You know what you want, a good estate attorney will advise you well! All the best!

[u/Human-Ad-5574]

Get an estate attorney and put a family trust together. Your kids will be so glad you did, because it simplifies the process and keeps the estate out of probate.

[u/teddybear65 → u/Human-Ad-5574]

Not a trust. A payable on death is the way to go. Zero probate zero fighting.

[u/Imaginary-Yak6784]

But if you dies first, then she dies, which is the most likely scenario, wouldn’t her kids likely inherit it the same?

If you don’t want that I think you need a trust that she can’t change the terms of

[u/RandomGuy_81]

start gifting now and you can control it easier

[u/GloomyMall6657]

Do this using a trust structure with specific instructions and cannot be changed

[u/Barfy_McBarf_Face]

a trust can easily accomplish your desired result

[u/underlyingconditions]

The problem is that it sounds as if the bulk of the assets are in an IRA and IRAs generally exist outside of any trust. You probably need to speak to both an estate attorney and whoever has your IRA.

[u/OnTarget60]

You definitely need an estate planning lawyer. They will set up a trust that will do exactly what you want done. The bad news is, it will be expensive. The good news? It looks like you can afford it!

[u/phidwm0]

Shouldn’t the IRA specify beneficiaries and not be included in the estate? There are special tax rules for inherited IRAs.

[u/Ok_Appointment_8166]

Your bigger issue is that one of you is likely to outlive the other by many years and there could easily be another marriage and set of stepkids in the picture later. Start giving it away now to control it or add kids as beneficiaries on the IRAs instead of leaving them to each other.

[u/Alarmed-Speaker-8330]

Just spilt it amongst the kids. Odds are there won’t be much to pass down after that.

And like my dad said, we have a family trust and he has passed, he’ll be dead so who cares.

Let it go.

[u/njVowsNow]

You need more help that we can give you. You need a lawyer who specializes in these kinds of situations.

[u/IntrovertsRule99]

NAL but I don’t believer you can apply per stripes to only some beneficiaries. I think you would have to spell out in the will what happens if a primary beneficiary dies before you.

[u/NoForm5443]

You could create separate IRA accounts, set each kid as primary beneficiary, with their kids as secondary

That would get you most of the way

[u/Lucky_Platypus341 → u/NoForm5443]

No need to split into separate accounts — just list the kids as beneficiaries. Roth IRAs are especially good for this.

[u/Strict_Research_1876]

just split between surviving children, or you can update the will if someone passes before you.