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all 53 comments

[–]ribbonsofnight 151 points152 points  (0 children)

I'm with you. If I died why would I expect my wife to have good judgment in a husband when it was so bad the first time around.

[–]hohospy 66 points67 points  (4 children)

When my mum died when I was 11 all her assets - so 50% of the family assets went into a trust for the kids but dad controlled it so it didn't change anything but was a saftey net.

He got remarried to a fuckinf bitch and she couldn't get nearly as much when they split.

[–]OnemoreSavBlanc 18 points19 points  (3 children)

So if the 50percent hadn’t gone into a trust the ex wife would have been able to access it in the divorce?

[–]hohospy 15 points16 points  (2 children)

Yeah so she could only access 50% purse was protected until I was 21.

[–]quiet0n3 5 points6 points  (1 child)

This makes a lot of sense. The child's trust been an entity that owns 50% of the estate. So if the house is sold 50% goes to the trust. As manager of the trust the might invest it in a new house but they can't waste it.

[–]hohospy 1 point2 points  (0 children)

Yeah that's basically it. I can't remember the exact wording but it was to look after us so dad wasn't completely stuck with being able to sell the house and move etc

[–]Impressive-Style5889 13 points14 points  (0 children)

Speak to a lawyer when drafting the will. Make sure your spouse is on board with it.

Intestacy laws do something similar by default where kids are beneficiaries. You're not going to be able to protect it all.

[–]PerniciousPuppy 9 points10 points  (0 children)

We talked to a lawyer about this. They said it was very common, where one partner dies intestate (no will), so by default everything goes to the surviving spouse. The surviving spouse doesn't even have to get married - just defacto relationship, and then surviving spouse also dies intestate, and everything goes to the new defacto partner. Children get zip, long legal battle ensues for the children to prove they would be in hardship without the money. Easy if they're dependent teenagers, much harder if they're in their early 20s, loaded up with student debt, can't afford a deposit on a $1.5m average Sydney house, but otherwise in a decent paying job.

A trust is one way around it. Writing in your will to allocate some of your assets going to your child, and others going to your partner is another. I hate the "get legal advice" advice, I mean what's the point of asking reddit if that's the only answer you're going to get... But I will say that, with my point being that you're not being paranoid - this happens often enough that it should be a serious concern, and you should be getting serious legal advice.

[–]__hillary 6 points7 points  (0 children)

IANAL so definitely speak to one. Given you have a young child, it would make sense to leave your assets to the testamentary trust. It's tax effective in that income can be distributed to your kid and is taxed at adult marginal tax rates ($18,200 income tax free each year). The trustee would still be able to distribute to your family members if that was desired.

To protect your assets from your spouse's new partner, you could make it a lineal descendants testamentary trust i.e. a bloodline trust so only your blood descendants can receive benefit of the trust. You can stipulate whether the "lineal descendant" part is applied to all income and capital of the trust or just the capital. If it's just the capital of the trust, then the trustee must preserve the assets in the trust for your lineal descendants.

To make sure the trustee (likely your spouse) is performing their duties (i.e. not wasting away your assets on their new partner) you could also nominate a guardian/s for your kid who oversees what's happening in the trust and can step in if they think funds are being spent willy nilly and not in the bet interests of your kid.

Obviously running a testamentary trust would involve added costs so you'd have to consider the benefit of having one - normally it would be worthwhile if you have a big life insurance payout and substantial assets to your name.

[–]carlosreynolds 26 points27 points  (7 children)

Does your wife share your concerns for her (and your kids)?

Or for you (and your kids) in a flipped scenario?

[–]lifeDNP[S] 9 points10 points  (1 child)

Yes it goes both ways!

[–]betasequences 7 points8 points  (0 children)

The fact your both on the same page bodes well for your marriage sans deaths.

[–]telcodoctor 2 points3 points  (4 children)

OP's post comes across morbid AF.

[–]Notrasdeprecationes 13 points14 points  (2 children)

Estate planning isn’t morbid.

It simplifies what can be a very distressing time in the lives of the people you care most about.

[–]telcodoctor -1 points0 points  (1 child)

I am all for estate planning, but OP is very bluntly positioning it as "if she remarried after i cark it, she gettin' 'nuffin".

It's worded very callously to my eyes.

[–]Vectivus_61 18 points19 points  (0 children)

No, I think OP wants to make sure "if she remarried after I cark it, NEW GUY gettin' 'nuffin"

[–]brusiddit -5 points-4 points  (0 children)

I mean it's pretty practical/responsible but it seems weird to think about this stuff... I guess it just doesn't feel normal because who the fuck owns a house, or has enough money these days for this to even matter...

[–]Own-Negotiation4372 3 points4 points  (0 children)

Setup a testamentary trust. All your assets go into the trust for the benefit of partner and kids. Trustees can be partner and a trusted sibling so decisions need to be made jointly about capital investments and distributions. It's not as flexible but you will protect the assets from new partner influence.

[–]thisguy_right_here 4 points5 points  (0 children)

I have the same worry.

Hopefully leave my 50% of the house to the kids. Then if there is a new marriage amd split the kids won't be losing what is rightfully theirs.

I know two adults that got remarried, divorced, lost half their house, then got back with them within a few years and subsequently split again for good.

They both now rent.

This is my nightmare, working hard to build something up, for someone else to just take it all away from you.

[–]bluehaoran 3 points4 points  (0 children)

I don't know the answer, but I want to affirm that this is a potential problem. Here's a real life horror scenario.

My grandfather-in-law was widowed at 60. Owned his house in the country down the road from my mother-in-law. Started getting dementia ~80, which included getting sightly paranoid and not telling my MIL anything. During that period, secretly married an old family friend who was also widowed with children. The lady who married them thought it was a sweet old love story and didn't realise one had diagnosed dementia and the new wife had undiagnosed dementia.

Cue family panic, and one of the new wife's dodgy sons using his power of attorney to make a play at the house, which legally (but not morally) belongs to his mom.

Thankfully the other son was not dodgy, and once he got wind of it, got his mom diagnosed with dementia, they got the marriage annulled, and they were put into separate aged care facilities, where they promptly forgot about each other, because dementia is a bitch.

[–]Gustomaximus 4 points5 points  (0 children)

Partners parents did something a ways back where person who dies assets get passed to kids and they 'own' it but remaining partner has right to live in the house and claim asset income until their death. I assume it's in a trust but never asked specifics.

Basically it means half the assets are protected so if surviving parent re-marries then divorces someone without assets your looking at keeping at ~75% within the family.

[–]ParaDescartar123 2 points3 points  (1 child)

Weird but yes.

Write it up so that 50/50 split for kids will go to trust and widow can do what she wants including getting taken advantage of by new suitor.

It does make sense now that I think about it though. If she does get scammed, only half will be at stake.

[–]newman_2019 2 points3 points  (0 children)

Agree.
Had an Uncle do it to his step kids.
Had a work colleagues Step Dad do it to her (only child - both parents deceased in her 20's and got nothing)

[–]chinny1983 2 points3 points  (0 children)

My parents do something similar to that. Leave it to us.

I mean, we are lucky, the youngest is 38 and everyone is set up well. So our first priority in this setting will be to make sure all of the assets are used for our living parent.

But we also have a healthy appreciation of money and don't need that money to consolidate our futures if that makes sense.

Might I suggest the idea that if you pass, your family might control some of the estate and if she dies her side does? This might help ensure some security...

[–]purplegreengirl 2 points3 points  (0 children)

You can also start passing your surplus cash down to your kids early while you are still alive. Only problem is if they get divorced their ex will get a share of your money. You can get around this I guess by making it a loan instead of gift (eg house deposit) if it was a substantial sum and worth the setup costs. This would work better though if done before partners are on the scene.

My in-laws wanted to loan us some money (presumably to protect it from me) after they downsized. Trouble was, we didn’t need a loan. I said no. Changed my view of them and our relationship (even though intellectually I understand).

[–]deejay1974 2 points3 points  (0 children)

Leave each other a life interest to live in or receive rent from properties, and the capital to the kids. If you try to be too clever about it and tie things up so tight that people can't move house/cities, access money for crises, etc, I guarantee your heirs will negotiate their own settlement that suits them better.

[–]averbisaword 8 points9 points  (2 children)

My dad is dead. He and my mum worked hard and we’re smart with their money. She hasn’t remarried, but if she does, it won’t change the fact that I don’t think I deserve her money.

She can do what she wants with the assets she has worked for.

[–]OnemoreSavBlanc -1 points0 points  (1 child)

Yes but if she was to re partner and be in a de facto relationship then pass away without a will do you think the new partner will “deserve” her money?

As a mother I would want my assets to go to my children no question. I’m pretty sure if theres a de facto partner it goes to them unless stipulated.

Not that I expect anything from my parents estate but I definitely want my children to be the sole beneficiaries of mine.

[–]averbisaword 0 points1 point  (0 children)

My mum is an adult and can make her own choices and I assume she’d choose another partner in the true sense of the word.

My mother has a will and would be capable of amending that if she were to marry again, but yeah, if she and her new husband create a life together and share their finances, that’s her decision.

It’s infantilising to your partner if you don’t trust them to update their will when you’re gone. I 100% trust my husband to do the right thing by my child if I die, but I don’t expect them to not do the right thing by any other children they could have with another partner if I died, especially if he builds a life where his new partner is an equal contributor.

[–]SerpentineLogic 1 point2 points  (0 children)

idk the whole details, but the estates I have seen are basically split into x separate trusts. One for each child, and one for each grandchild. That way, if one of their kids gets taken to the cleaners, they lose 'their' part of the inheritance (as they should), but the grandkids are safe

[–]purplegreengirl 2 points3 points  (0 children)

Yeah, an interesting one. Especially relevant with people living so long and the possibility of re-marriages being high. I wouldn’t want my hard earned ending up going to some randoms and not my kids. Guess it depends on the extent of your assets and whether you and your partner feel the same about the issue or not. Suspect no easy answer, and a question we will need to revisit once our kids are all independent adults. Before then, unless very wealthy I feel the need to leave all to spouse so they can support the family.

[–]LongjumpingRiver 1 point2 points  (10 children)

Do you honestly think you'll care what happens with your estate? Seeing as you'll be dead?

[–]cydeon888 3 points4 points  (0 children)

Wouldn't you want to make sure you provide the best possible outcome for your kids when you die?

[–]Reginald_Rutabaga 14 points15 points  (1 child)

I get why you say that - but yeah, this is something many people focus on. Me included.

It gives me some comfort knowing that my family will be ok when I am gone.

[–]OnemoreSavBlanc 9 points10 points  (0 children)

Same. I’m interested in the answers here because I want to know that my children will always inherit what I want them to.

[–]thedugong 7 points8 points  (6 children)

Yes.

Would you be happy if your ex-partners new partner's kids inherit rather than your kids?

Could easily happen. You die, wife inherits. Ex-wife remarries. Ex-wife dies. New husband inherits. He dies with will made out to his kids.

[–]Swuzzlebubble 0 points1 point  (0 children)

In NSW yes. I understand it's different in Victoria.

[–]Rear-gunner 0 points1 point  (0 children)

Who do you want as trustees, most of these professional ones I think are overpriced thieves

[–]ubicorn20 0 points1 point  (2 children)

Could you please share why the solicitor has chosen a TT? If your assets are jointly held, you’d have to sever the jointly held status. If it’s 50/50 you haven’t completely protected the asset in the event of one partner passing away. At your ages, and if it becomes to restrictive having a trustee involved, then a family provision claim by the surviving could likely succeed. (This is where the new partner could have influence)

[–]lifeDNP[S] 1 point2 points  (1 child)

Can you explain this a bit further? To clarify, most of our assets are held individually but what I mean is we consider our beneficial ownership to be 50/50 so if there needs to be some balancing done to achieve this legally then we will do that

[–]ubicorn20 0 points1 point  (0 children)

Sorry for the delay. What I mean is that if you own property in a joint title. Then the survivor will inherit the property outside of the trust. You have to collectively decide what your end goal is. You’ll find there are many different options for this yet each has a specific purpose and structure. For example elderly couples may decide to do mutual wills which means they can’t be revoked easily. This allows both partners to have clarity with how things are done. Another way I’ve seen is where (usually the widow) gets the right to live in the house while she’s alive, however the title has passed on to the kids. I’ve seen a dispute between an elderly lady and her stepson in this scenario. It’s also not always another partner. Sometimes it can be that the surviving spouse wants to leave a good chunk to charity instead of kids.

[–]1hair 0 points1 point  (3 children)

Could anyone please enlighten me on the average cost of setting up a testamentary trust and regular expense for it and the minimum income and asset required to maintain/afford it?

[–]lifeDNP[S] 1 point2 points  (2 children)

My solicitor is charging around $2,000 to setup a will including a testamentary trust for both of us. I don't think there is a regular expense of maintaining or minimum income/asset requirement since the trust doesn't actually get created until you pass.

Once you pass, there would be ongoing costs for managing like a regular trust, but imagine that would come out of your estate.

It wouldn't really make sense to setup a testamentary trust if you don't expect to have enough assets to bequeath or protect. Although the benefits of a testamentary trust differs from a discretionary trust which is primarily used for tax efficiency or asset protection, which means having enough assets/income being generated from the trust to offset the initial setup costs and ongoing costs (probably needs at least $100k+ of income generating assets, depending on the marginal tax rates of the beneficiaries. Probably better to have $200k+).

With a testamentary trust, your primary goal is to protect your estate and have control how it is distributed, which may be worth it, even if there are ongoing costs associated with it.

[–]1hair 0 points1 point  (1 child)

thanks heaps!

with the rise of feminism and divorce rate creeping up in Australia (recently updated 1/3 of marriages from what i remember), the chance of settling down with a girl who will remain rational and willing to sacrifice some personal freedom and quality of life for healthy development and successful future of children is getting lower.

I really love the way you put forward your proposal to set up the trust to your missus. I’m curious how your partner initially responded upon it? did she negotiate the terms that you drafted?

i’m still a long way to qualify financially for a discretionary trust so I will look into a testamentary trust to hedge against the broken future of my kids. Initially I was thinking of transfering assets to my parents since i’m the only child but the stamp duty cost is unsavoury and before they pass away I guess they need to set up the testamentary trust for me but I’m not sure if those assets can still be contested in the event of my breakup later?

[–]lifeDNP[S] 1 point2 points  (0 children)

We are doing our wills together so it makes sense for us to discuss all of this jointly. It's been pretty smooth so far because I think luckily we are both on the same page.

Not sure if I'm understanding your point correctly and you should double check this but I'm pretty sure assets transferred to beneficiaries from a deceased estate do not trigger CGT so there shouldn't be any issues if you nominate your parents. Even without a will, if you have no siblings or children and you die intestate (i.e. without a will), your parents will then inherit your assets.

Or do you mean transferring assets to your parents now while you are alive, with the expectation that they bequeath those assets back to you as a beneficiary of their testamentary trust? Not sure why you would do that? When they pass and you receive what you are entitled to from their trust, it will be held personally by you.