Trust
Topic - Gifts
to Children
In my opinion, having twins
is poor college planning. My parents were faced with
three out of the five of their children in college at
the same time. As they coped with their financial challenges,
I maneuvered through the world of marginal solvency
as well.
In those days, long distance
calls were expensive and, in my family, calling collect
was forbidden. During one frugal period, I hadn't called
home in over two months, weighing my expenditures heavily
in favor of calls to my girlfriend who lived down the
street. So, one evening I again allocated my quarters
in her favor, but absent-mindedly dialed home. When
my mother answered the phone, I became confused and
tried to process this unforeseen event: "What is my
mother doing at Mary Anne's?" My lengthy silence was
finally greeted by my mother: "Jack, is that you? You
were trying to call Mary Anne, weren't you?"
My mother's intuitive
sense of where everything stood simply deprived me of
the upper hand in my efforts to gain independence without
losing parental support prematurely. As children leave
the nest, their interactions with their parents frequently
revolve around support issues. Sometimes the communication
is clear and harmonious between parent and child and
other times it is not.
In estate planning, when
and how much to leave your children may be the major
challenge. Too much too soon may be damaging as well
as too little too late. Most of our clients will delay
final distribution until age 21 but many go further
and provide for assets disbursements in stages. For
example, many of our clients continue the child's share
in trust, with the child receiving income and : "after
a child has reached the age of 25 years, the child may
withdraw any part or all of the principal of his or
her share at any time or times, but not to exceed in
the aggregate 1/2 in value thereof prior to reaching
the age of 30 years".
If I had to guess, I would
say the most popular distribution in our neck of the
woods is in three equal stages at ages 25, 30, and 35.
Although lately the stages seemed to have moved up a
notch to 30, 35, and 40.
There
are many factors to consider when providing for children.
Furthermore, there is an emerging trend to use trusts
as parent substitutes to a degree I have not seen before.
Perhaps as a result of a significant increase in the transfer
of wealth, parents are fine tuning their trusts so that
their children are rewarded for positive behavior.
And some estate planners,
albeit few, focus on both tax savings and family
values by incorporating a mission statement reflecting
the "family financial philosophy" (how much money they
need for their own lifestyle and medical care; how much
is appropriate for their children; and how much they
want to pay in taxes or give to charity).
So there are many things
to consider. One of my friends, who seemed to take great
pride in controlling his children, said "control is
good…I like the fact that I can control from the grave…".
I don't recall experiencing tension with my parents
around financial concerns. Mom wasn't controlling; she
just knew.
Jack Davidson , NHTC Board Memeber
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