line of beneficiary — change of estate plan
We have a trust indicating my son and daughter are our beneficiaries. My daughter has an 14 year old son and remarried 5 months before she died unexpectedly. We have taken guardianship of her son and we have given custodial care to my son and his wife. My daughter’s husband of 5 months is no longer seeing the boy per the boy’s request. My question is who will receive my daughter’s portion of the trust? Does the former husband have any right to that inheritance and what can we do to change that if he does? Is it best to have the trust updated? Thank you.
Terry Says
What a sad and ugly situation. Definitely go to your estate planning attorney and have your plan updated. You no longer will make your daughter a beneficiary, but you will set up a trust on behalf of her son. Your Son can be the trustee, and you probably should have a secondary trustee named (even the attorney) just in case. Then also have this attorney formalize the custodial relationship of your son and his wife. You don’t want the ex coming back to claim any part of the custodianship (and derivatively of the estate) for himself.
You might also want to set up a 529 college savings account for your grandson, with your son as custodian. You could each put up to 5 years of the allowable $16,000/year annual gift into this account in one year. That’s a total of $180,000 you could give. It will grow tax-free for college for him. And it moves the money out of your estate.
You don’t want to put ALL his inheritance in that 529 account — leave some in the trust for his needs until college — anything from a computer to a car — all determined by his uncle.
Check out details at www.SavingforCollege.com. Or you could just go to Vanguard.com and open a 529 account. It doesn’t matter what state you live in, or what state the boy lives in. And it could be used for any college in any stat.
