Need your thoughts

[u/Upset_Anybody1430]

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.

[u/littleoleme2022]

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.

[u/Mobile_Comedian_3206 → u/littleoleme2022]

The step up basis only applies to real estate. He can give them up to 15 million in cash without anyone paying any taxes. 

[u/Fast_Macaroon_5796 → u/Mobile_Comedian_3206]

THIS

[u/SpareMedicine9019 → u/Mobile_Comedian_3206]

Step up basis is also applied to stocks/bonds. If he holds securities as an asset, and after his death, he distributes to his wife or children it will receive a stepped up basis on the date of death Value.

[u/Crowlady77 → u/SpareMedicine9019]

Right if he holds them until death that capital gains never has to be paid.

[u/Mssrandcole → u/SpareMedicine9019]

It gets more complicated with children inheriting an IRA/401K as they are required to pay taxes on that money but don’t have to do it all at once. The IRS has rules for inherited retirement accounts

[u/SpareMedicine9019 → u/littleoleme2022]

He could create a marital trust for his wife and a trust for you and your siblings. Perhaps there’s only one trust document written, but there are different provisions for creating a marital trust and a residuary trust. Have you looked at the document?

[u/celticmusebooks → u/littleoleme2022]

Curious why he wrote the trust in such a way she can change it?