How to structure my Estate.

Good Evening,

Little Back Story.

We have a PPOR and 3 investment properties, all CF+ .
My family consists of myself and 3 sons. the two eldest (32/33),whom have wonderful spouses, are very astute and fiscally responsible. The youngest(30) and his spouse, are not so fiscally responsible.

Despite our best efforts to help them understand fiscally responsibility, they continue to live week to week. Everyone in the family is worried that their Sibling (my youngest) may be taken advantage of, by his new spouse, because of their lifestyle.

We have spoken to a few lawyers in regards to this. Because I am truly concerned.

Options offered were; Bloodline trust or testamentary trust for future children when they turn a certain age or so assets stay within the family. Or multiple trusts for different children, but similarly Bloodline trusts.

I have thought of also considering making two eldest executors, with provisions that they provide some financial assistance to their youngest(when/if) they learn to be more responsible. I do not want to disadvantage the youngest, i just think this maybe something he learns a bit later than the others.

I know some people never learn, but my goal is for everyone to amicable and together.

Are there any other suggestions for possible ways to do this?

Best Regards

 

Not much else you can do.

Either
a) direct gift, or
b) gift to trustee to drip feed them.

You could appoint an independant trustee which could be a professional company or an uncle etc who is not a beneficiary.

The trusts can be set up in many ways to prevent them from accessing capital and blowing it too quickly
i) restrict access until a certain age
ii) restrict access to capital altogether but allow them the income. This is a life interet
iii) by pass the kids and leave to the grandkids

Keep in mind that they can challenge the will under Family Provision legislation, even if you do leave it to a trust of which they are the main beneficiaries.

Don't forget to consider your super and life insurances too.

 

What terry said - and you could be sneaky and make a contribution to the youngest child's super fund.

Locks it away until they are old.

Still - matrimonial law can access and they can invest poorly - but it is a possibility.

Think about a family charter as well. The process of drafting these can bring people into the family.

Getting your youngest son on charge of a private ancillary fund is also a good way to educate kids financially who refuse to become engaged.

 

If at 30 your son is happy leading the life he is, why would you worry about his perceived lack of fiscal responsibility? Sounds like your pending benevolence is predicated on him leading the life you want him to lead.

 

The option one is not easy ...hard to decide who gets what
Even split based on market value or on income or ???

 

Not distributing an estate to children equally will lead to bitterness and resentment from the one who has not been treated equally and the breakup of the relationships with his siblings which will bring sorrow to the family for many years. Do you really want to leave such a legacy?

 

Here is an article
Is it ethical to treat your children differently in your will?
Is it ethical to treat your children differently in your will?

 

There are many reasons to differentiate between children. If you do, you needto have a difficult and open discussion among the family.

That could include a facilitator who understands family.

For example:

If one son works on the farm all his life for zero pay and the other becomes a doctor and earns a fortune - is it fair for the parents to split the estate equally on death?

What if one child has had significant support all their life and the other has not - is it fair to split the estate equally.

Some religions mandate that the estate is divided differently according to sex of the child (not my religion but you have to respect another family has different beliefs).

Sometimes the allocation is unequal to achieve a better financial outcome after considering all government imposts.

Every family system is different and complex. You cannot apply a one size fits all.

We have helped five generation businesses and this is the most complex area we advise on.

 

I like that TV ad for the shapes snacks. The son is holding 2 boxes and askes his dad if he has a favourite. The dad is not looking and is distracted and says "yes your sister"

 

Totally agree.

We know of several families where the siblings no longer speak to each other due to unequal treatment under a parent's will. I am sure the person had their reasons, but the fallout has been very sad.
Marg

 

Will could have a testamentary provision for youngest and trustees are the elder two kids but that doesnt always work. While it may safeguard asset waste it may be seen by the younger as a way to control him after death. ie two elder siblings get estate 1/3rd each estate and other 1/3 on testamentary trust for sibling.

However in the period between now and then I can almost expect to see Murphys law of estate planning operate. It says that one or both of the other siblings will divorce after the inheritance of course and the younger wont. Your planning can be for nothing.

 

The new spouse will take assets at the expense of your children.

 

I think Terry has a Tip in this regard, not 100% sure though.

 

Testamentary trust for the children. Can exclude the new spouse from being a trustee or beneficiary. Maybe even exclude you spouse.

Or leave to your kids directly.

If own property as join tenants consider severing to tenants in common now

 

A deed of mutual wills could prevent that

 

A mutual will is a contract not to change a will. But what happens if properties are acquired and/or sold, new marriages entered into - a marriage generally voids an existing will and family provision.

 

To avoid bitterness leave all the kids nothing so they get "distributed" equally and have no bitterness/resentment to each other and leave all the money to your favourite charity. All the kid stay in a happy relationship to each other that way

 

I do not understand why kids get bitter between each other if their folks leave them different amounts in the wills. It's not an issue between siblings, it's an issue a sibling has with a deceased parent.