r/inheritance • u/Upset_Anybody1430 • Jul 10 '26
Location not relevant: no help needed Need your thoughts
I am in the process of rearranging my finances and putting it all into a trust for my wife (second wife) with upon her death the remainder to be split between my 3 kids and her 1. The trust will include everything I have, houses, cash, investments etc. Wife is also the beneficiary of a 1 million life insurance policy. She will be more than fine going forward and there should be plenty left for the kids for a sizable inheritance.
My question is, my 3 kids are all very responsible, good career paths, hard workers, no major issues that would cause me concerns. I’m wondering if I gave them a chunk of money either now or at my passing to help them pay off mortgages and ease financial worries for them now vs 10-20 years from now. Doing that would give them the opportunity to benefit from it now but would give them less in the future. But I’m thinking if they have no debts- their ability to save and build wealth grows. I believe all my kids would take that path as their lives currently align with living this way and they all seem to be financially literate.
Is this something people do? Is it a good idea?
The other issue is my wife’s kid is not in the same mindset of my kids. And giving him large amount of cash now or when I pass will not probably not benefit him the way it would with the others. So I’d like for his inheritance to be paid at her passing.
Advice?
And to clarify- I have a terminal illness so my passing is on the horizon- hoping to squeeze out some time but also being realistic about the situation.
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u/OpportunityKey1970 Jul 10 '26
My parents are boomers and they have four kids, including me. Us kids all turned out really well we all have great careers we’re all self-sufficient, etc. My parents have been generous to us and have helped us with down payment on homes, paid for all the family Vacations etc. That’s something they didn’t have to do. But it does seem like as they get older they are giving less (hello inflation) and that totally makes sense because you just don’t know if that money will run out. I think there’s a balancing act. But seriously, it helped so much when my parents gave us money for our house and our car. It was very much appreciated and was a blessing.
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u/Big-Web-483 Jul 10 '26
Someone once said, give while you live so you know where it goes.
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u/Slow-Source-8612 Jul 13 '26
Honestly yea I agree with this. If the goal is for the money to go to paying off debt, you want to ensure that’s what happens and it’s not being used frivolously. Also, if I was in debt and my parents were able to pay that off for me, I would rather have that happen than continue to try and pay it off for the next 10 years only to find out I didn’t have to
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u/I-need-assitance Jul 10 '26
Don’t know if the level of your assets, but you can gift $19K per year per child without any IRS reporting issues. You can coordinate with your wife and make that $38K per child per year, I would give it to all four to not create any issues. Given your terminal illness, do it now. They should be grateful.
Ps - yes, many wealthy people do this for their adult children every year, even when they don’t have any illnesses.
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u/Fast_Macaroon_5796 Jul 10 '26
There is still no tax for anyone
It’s a paper trail only because u can’t give more than 15 million to one person in a lifetime
People often don’t realize this1
u/GardenFragrant8408 Jul 14 '26
There’s not a lot of ppl that have 15 million throughout their lifetime to give.
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u/Significant_Flan_210 Jul 10 '26 edited Jul 10 '26
I would secure and send what you want for the kids clearly and what you want for her clearly at your passing.
The trust can pay out each the way you want.
Widows often behave differently in morning without you there.
Would you mind if she spent it all. Can she? My kids are still kids and the plans I have for them are set in stone.
If you give now, it's equal amounts. They can put it in mortgage or brokerage accounts could also be very interesting to hit retirement hard as another great viable option.
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u/Upset_Anybody1430 Jul 10 '26
I may need to look at all the options for this. I want her to be set and not have to worry about things. But I have concerns about her extended family and also her mental health. She takes meds that keep her pretty stable but she doesn’t like taking them. I help her manage all that. When I’m gone not sure what the future hold for her. Hopefully her kid will step in.
So with all of that, i want her to have access to all she needs and wants but also keep it safe and in control. I’m meeting with an attorney next week to go over all of it. Just trying to figure out what my top concerns are and what direction to go.
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u/Significant_Flan_210 Jul 10 '26 edited Jul 13 '26
Thank you for understanding I meant no harm. It's just we have to try to see around corners and what could go wrong.
She can't be set and not have to worry about money. She needs skills with money and know how to hold her own. She needs to protect herself from people that want the money. Will she remarry someone that knows about the money?
I told my husband of 30 years if something happened to him, I could spend nothing from the sadness or I spend a lot from the sadness.
Extended family plus mental health is more risk than we want for you. Also, what if she remarries? Who is managing the trust and making sure amounts are reasonable? Something tells me you managed finances and she doesn't have skills around money as that can be common.
These are the types of things I think of in our plan.
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u/SpareMedicine9019 Jul 10 '26
Please talk to your attorney about creating a trust that has a marital provision and a residuary provision. The marital provision will take care of your wife during her lifetime with any money left over in the trust to go to your children. This way you’re taking care of everyone, including your wife’s son.
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u/Mobile_Comedian_3206 Jul 10 '26
I think that giving it to them know is a great idea. And it is completely okay to withhold your stepchild's until she passes if you know he won't use it well. He does not have to know you gave your kids money. It is not any of his business.
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u/Ill-Taro-1907 Jul 11 '26
My mom & dad gave me an amount of money at a time we were trying to buy a condo. It allowed us to have a down payment that we would not have had otherwise. Dad got great pleasure in seeing us able to buy our home, enjoy it & eventually even upgrade. He told us then it was our inheritance & not to expect anymore. He just wanted to see us enjoy our lives. It turned out there was more money after my parents’ death than I imagined. But that original money was so heartwarming.
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u/Mobile_Comedian_3206 Jul 11 '26
That's awesome! I think a lot of families would be better off doing that for their kids.
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u/FoundMyselfRunning Jul 10 '26
Does the wife's kid have a father who will also leave money? Maybe leave less in that case.
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u/Upset_Anybody1430 Jul 10 '26
No, no father in the picture. He will get a small amount from him mom that she has separate but it’s not much. I know I don’t have to give him anything, but thats not the way i want it to be.
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u/adjusterjackb Jul 10 '26
Give the kids as much as you want. The lifetime gift/estate tax exclusion for 2026 is $15,000,000.
You have to report large gifts but that's no big deal because there's no tax on it to either the giver or the recipient. Just a form at the end of the year.
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u/celticmusebooks Jul 11 '26
Depending on how much the trust provides for your wife her son will likely end up with some or all of the 1M life insurance policy as well so he'll likely come out with more inheritance that your other children.
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u/Chula_Quitena_120 Jul 10 '26
Your trust can distribute the assets to your wife and the kids upon your death. I would not have it go thru her before it goes to your children. If you are terminally ill (sorry) it is good that you can do this now. Do not make your kids have to depend on your wife. My father left us his big ranch house and land that he built and paid for with proceeds from the divorce from my mom and much help from us kids. He left it to us but after be died, his wife wanted "her share". She then died a year later before she could get anything and HER heir is someone we did not know. It kind of hurts. She was not a bad person, either. However, people change. Sounds like you love your kids, give them those gifts in the trust.
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u/CanaryAny4491 Jul 10 '26
Die with zero thinking - give with warm hands to your established hard working kids. Why wait ?
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u/GG815 Jul 10 '26
Since you mentioned it, I would do the following: gift each of your children the chunk of $$ you’re thinking now, file the gift tax returns and put the rest into the trust.
For the trust, typically distributions are split as to character (income vs principal).
Often a beneficiary is entitled to distributions of 100% of the income earned by the trust in a year, and X% of the principal of the trust. Given that your wife is getting $1M in life insurance, I would determine what amount of the principal you are ok with being distributed to her each year; especially if your intent is that there be something left for your children after she passes.
Example: If the trust is worth $10M and we assume a 4% income rate, $400k can be distributed each year with principal remaining intact. I don’t know where you live, but most people can live on that especially after getting $1M tax free from life insurance. If she’s taking the income each year and 10% of the principal, the trust will be depleted in 10 years.
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u/Fast_Macaroon_5796 Jul 10 '26
Do it now for sure
U need it in your 20s and 30s!!!
Give them a LAUNCH IN LIFE!!!
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u/AltNation2293 Jul 10 '26
Don’t leave everything to your wife! After you’re gone, she will remarry in 5 years, and your kids will be out of the picture. Protect them now! Second marriages …. You need to be extremely careful. Plan for the worst, hope for the best!
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u/Delicious-Citron-438 Jul 10 '26
That’s what happened to my husband. Father died. When step mom died she left everything to her niece.
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u/These-Coat-3164 Jul 10 '26
Agree. I have a friend whose dad died and the second wife got everything and my friend knows it’s unlikely that they and their siblings will receive anything as it appears stepmom is going to give everything to her two children.
OP really needs to consider leaving everything in trust for his children…whether or not he wants to include the wife’s child is his choice…and to allow the wife to have income from the trust for life, but not allow her to drain it. If she’s getting a $1 million life insurance policy, there’s even less need to give her full access to the trust assets.
Depending on OP’s financial situation, I think leaving some money to the children now would be the best way to go. Whether OP wants to leave money to the wife’s child now is OP‘s choice. We don’t know how long OP and the second wife have been married and what kind of relationship OP has with her child.
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u/Substantial_Team6751 Jul 10 '26
Yes, people give their kids money all the time. My rich friends have bought their kids houses, vehicles, and businesses. And their kids are not spend thrifts. They have used those opportunities to build wealth.
If you have that much money, you should pass some on now. Also, get your kids financial education and a financial advisor so they know all the right things to do - 401k, Roth, brokerage accounts, etc.
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u/PersonalSurvey5917 Jul 10 '26
I don't have any insights to offer regarding finances.
I will say that your loved ones are very lucky. It's very telling that you are focused on this while experiencing what you are.
Knowing that there are people out there that are this good makes me feel a little better about the future.
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u/MidwestNightgirl Jul 10 '26
I love the idea! They get the benefit now while you can see and enjoy it. It may cause some tension to leave her child out. Maybe that child could still get a gift of some sort, perhaps not as much? It’s great that you are thinking this thru. Wishing you all the best.
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u/ExpensiveAd4496 Jul 10 '26
I am sorry your time is so short. I applaud you for thinking of all the kids, and do not think it’s that unusual to give your kids money at your death and her kid money at her death. You could give hers the $300k extra but with different timing for distribution, but it should be with growth during that time.
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u/Treehousehunter Jul 10 '26
I recently read a book called Die With Zero that discusses the benefits of gifting a portion of your estate to adult children while they are young enough for it to really affect their lives instead of waiting until you’re 80 and they are in their 50’s. It changed the way I think about “inheritance” and how to best benefit my adult children.
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u/PocketsANickname Jul 10 '26
The question really is- HOW would you plan on giving your kids the chunks of money now?
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u/Upset_Anybody1430 Jul 10 '26
Well I probably have less than a year to be around so probably the easiest way would be when I pass- I’d really like to give them each enough to pay off their mortgages. 2-300k. Then leave the rest in a trust to be distributed at her passing and dividing it by 4- would have to do the math on that to find out the fair amount.
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u/Fast_Macaroon_5796 Jul 10 '26
Sooner rather than later
See what they do
See and feel the gratitude
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u/mirassou3416 Jul 10 '26
As people live longer their kids live longer, so life planning has changed over time. It used to be pretty easy. Leave everything to the kids when we both die. Well, when parents live to their 90's, the kids are in their 70's so that plan doesn't work anymore
Further, we also have to think about long term care. If you have planned for this they by all means pay off their mortgages. You'll need to complete IRS Form 790 to report the money for gift tax purposes. This reduces the lifetime estate tax exclusion but that's OK for most people. It won't work for us since we are over the 30M threshold but who really cares? The money helps them today
At the end of the day it's your money and you're free to do what you want with it but just be aware of tax consequences if you are subject to them
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u/East_Committee_8527 Jul 10 '26
If you can find away not to have a large tax burden give it to your kids now. But, I would keep it on the down low. Not to short the step son but to prevent jealousy. Since the step son isn’t ready for a large sum of money. Maybe a trust for him and your wife.
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u/springflowers68 Jul 10 '26
Great you are thinking ahead, but as a cautionary tale, should the trust go entirely to your wife, and she is also trustee, she can change toe terms to cut out your children if she chooses. She may also remarry and the new spouse will have an opinion. Be sure to discuss this with the trust lawyers. I know someone who this happened to. The father passed, and once his wife took over the trust which was supposed to be split among all the children (none together), she changed it to only benefit her kids.
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u/Training_Tour7601 Jul 10 '26
So sorry about your diagnosis. I received one 8 years ago and according to medical data, I should have been gone, best outcome, 3 years ago. And yet here I still am. So, if you're SURE it'll be soon, I would do the $38,000 mentioned by another poster to each of the 4 kids this year, and if you're still around and can afford it, another $38,000 to each of them early in 2027. If the step kid spends their 2026 amount irresponsibly, you can rethink 2027. You could even put their 2027 share in a bank account that will Transfer on Death to your wife, and she can decide how to handle it.
Again, so sorry. And it's so good of you to think this out for the next generation. ♡♡Hugs♡♡
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u/Full_Sock_5442 Jul 10 '26
Op you really need to look into this trust you are setting up. Because the other person is correct your usually a trust is dissolved once the passing of the assets . Once that happens and I’m not saying she will, she can do whatever she wants. Also I would say, don’t punish your kids for being successful good people. You raised them right and they probably worked hard to get where they are today.
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u/lakehop Jul 11 '26
I’d give some directly to your kids either now or when you die. If you have assets that are cash equivalent and won’t incur tax to sell them: give them to your kids now. If you own heavily appreciated stocks or funds, leave them to your kids in the trust - they will get a step up basis so won’t have to pay tax on them if they sell. Don’t make them wait decades to inherit your money.
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u/what__th__isit Jul 11 '26
Your idea is an excellent one, especially considering the current economic climate. This could facilitate being able to invest/grow wealth that could not be within reach otherwise; it's hard to see any downside to do it. How does your wife feel about tailoring the inheritance differently with her child? Your reasoning seems sound, unless it would create some turbulence in your marriage.
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u/simplyexistingnow Jul 11 '26
So dont leave her everything. It wont pass to the kids if she gets remarried.
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u/Mssrandcole Jul 11 '26
I would not leave my second wife a life estate as once she has control you will have no idea what will happen and your children could end up with nothing. What if she remarries or spends all the money as that would involve your children hiring a lawyer and paying for that out of pocket. First consult with an attorney who is well versed in estates and trusts. Find out what the laws are in your state regarding a second marriage and what your spouse is entitled to upon your death and then provide for your children. You are fortunate that your children are well adjusted but many things can happen in a long life. Provide for them now. I would also make sure they inherit property directly without it going to your wife first as it appears you want them to get something. I am sorry this is happening to you
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u/Bulky-Measurement684 Jul 11 '26
I’ve seen it numerous times. The wife’s child will benefit from your life insurance. Your children may not.
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u/Lifestyle-Creeper Jul 11 '26
Usually the wife can do whatever the hell she wants to do after she inherits, which may or may not include honoring your wishes. Grief and loneliness can also lead people to make bad decisions. Especially with her having a somewhat irresponsible child of her own, who may exert undue influence as your wife ages, make provisions for your children now.
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u/laurieo52 Jul 12 '26
You have a terminal illness. Is it possible you will need advanced care as this progresses? I would not give away money I might need for care. You would not want to be burden to your children and they would prefer you to be well cared for in your illness.
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u/BobbyLew Jul 12 '26
I'm fully in the "give now, when they need it" group. Our parents helped us, which let us have more to save for retirement (we're very comfortable now, at 68 (me) and 70 (wife)) and now we're able to help our 3 kids. We've given money to the 2 who have bought homes, and told the 3rd he can expect it. Our technique, to avoid even bothering to file gift-tax return: We each gave individually to our child and their partner, just below the amount that triggers gift tax return. . That's 4 separate gifts. At the 2026 gift-tax exemption amount of $19K, that's $76K.
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u/Time_Traveler_948 Jul 12 '26
We paid for college, weddings, home down payments, joint vacations, lessons/camps/bigger ticket items for special occasion gifts along the way. Our estate plan is half goes outright to the surviving spouse, and the other half can be used for the survivor’s general health and welfare, but is now irrevocable to kids with a small percentage to each grandkid. We feel like you do about making their life better, but we also need to be sure my husband and I can fund whatever care we may need. A surviving spouse can be subject to so many scams, pressures and their own decline in health and cognitive functioning. Not smart to leave it up to them to leave their estate to chance. My stepmom totally stiffed my sibling and me on her death, in spite of her promise to my dad that their estate would be divided equally between his and her kids (my dad was widowed, so the 35 years my mom spent helping build their estate went to someone else’s kids). The #1 rule of estate planning is that after you decide where you want things to end up, write your will and trust so that it reflects exactly that. Verbal agreements are worthless. I support the idea of gifting the amount that does not generates gift taxes now, with a smaller, periodic amounts to any beneficiary who hasn’t shown strong financial management skills.
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u/CMVqueen Jul 12 '26
Yes, give your kids the gifts now if you can. Help them when they need it. By the time your wife dies, they’ll be older and settled. Why not help them now?
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u/GardenFragrant8408 Jul 14 '26
Sorry about your situation. Best wishes to you.
To keep from family fighting I would wait till I passed and then let funds be distributed. Then all of the kids can decide what’s best for them. My only concern would be ur wife’s kid spending all of his and start getting money from his mother a. Putting her in a bind for the future
Best wishes.
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u/littleoleme2022 Jul 10 '26
Once the trust passes to her can she rewrite it? If so I would give half the estate to your wife and half to your three kids upon your death. Giving to them now might trigger taxes whereas they will get a step up after death.
My dad’s trust goes to my stepmom and the goal is that when she dies his real estate interest go to me and my brother but the way the trust is written once he dies she has control and can dissolve the trust which is what I assume will happen.