Posted on 09/25/2012 10:13:51 AM PDT by Kaslin
Dear Dave,
Im going through a divorce, and Im about to buy a $600,000 life insurance policy. My 9-year-old daughter would be the beneficiary. I need a trustee, but how do I pick a good one?
Marie
Dear Marie,
First, your daughter wouldnt be the beneficiary. You would leave it in a trust for her benefit. And Im not sure Id depend on an ex-husband to handle something that requires this much integrity. Youd be better off hiring a good attorney to execute the trust upon your death, or you can look for a bank that has a trust department.
Once you decide on a trustee, you must remember to clearly and specifically state what you want done with the money. Dont say to invest the money appropriately, because what a banker views as an appropriate investment and what I view as an appropriate invest are usually very different. A banker might put the money in CDs, or certificates of deposit, while Id probably look at something like mutual funds, which have a much better rate of return.
In many cases, a trust for a child is put in place to pay for their first car, a medical situation or their college education, but this is completely up to you. The balance of the money might go to them when they reach age 21, while they receive a monthly stipend for food and other essentials while theyre younger.
Im proud of you for thinking ahead, Marie. I know divorce is hard, but your little girl is lucky to have such a good and caring mom on her side!
Dave
Dear Dave,
How do you feel about using an online bank for your emergency fund?
Jared
Dear Jared,
I dont think thats a problem at all in most situations. Just make sure you do a little research. Know who youre dealing with and that theyve got some strength. A bank that is known as a click and mortarone that has a physical location as well as onlinewould be my preference. Some of them have great debit card programs that includes debit card rewards and high-interest checking accounts, too.
When it comes to an emergency fund, I like the idea of keeping it in a separate money market account. That way you get money market rates, plus you can attach check writing privileges to the account. Then when an emergency comes along, you dont have to worry about shuffling money around. You can just write a check out of the account. Problem solved!
Dave
Why not? Do only mothers love their children? Is a bank or lawyer really a better choice than the child's father?
He's wrong about the trust department. Bank trust departments must adhere to the "prudent man rule"..and they will invest long term funds, like these, in their own equity portfolios, unless the grantor ( the mom) specifies only CDs or other guaranteed instruments.
To make sure that the child gets the best protection, it is best to appoint TWO trustees, a family member or other person who understands what the mother would have wanted to do for her child, and a trust department to actually manage the money.
The classic example is that of the 18 y.o. who wants a $100,000 Corvette. The bank would say no, if it was the sole trustee..but if the co-trustee says, yes, the mom would do hat for her daughtewr, then the bank can cut the chekc and is off the hook for any claim of malfeasance.
Also advisable to give the family trustee a "hammer clause"..the right to remove the bank and and name a new financial trustee..this provides leverage against lousy service, lousy performance, and high fees..
Good advice. EVERYONE should adhere to the 2 trustees rule! We learned the hard way that while hubby’s dad had the beginnings of dementia, sister took Dad down to change the trust into her name only. Since then she has had him declared incompetent and stole almost every penny he had.
We have been in probate court for over 1 1/2 years now.
Dave Ramsey ping
I have a friend that has been mired in an inheritence situation. The root cause seems to be that the executors are just plain aweful. They finally all went to court and hopefully some progress will be made soon. I do know that it has caused a lot of unnecessary stress in my friends life.
When I finally set up a will, I thought of her situation and made sure that I set up my beneficiaries in a way that will minimize their stress. I’d prefer that my loved ones can mourn properly and not be distracted by inheritence complications.
That said, I hope I am around a long time so that I CAN change peoples lives when I pass....
Dave Ramsey Fan ping list. If you would like to be added to this ping list, feel free to FReepmail a request to me.
I have a friend that has been mired in an inheritence situation. The root cause seems to be that the executors are just plain aweful. They finally all went to court and hopefully some progress will be made soon. I do know that it has caused a lot of unnecessary stress in my friends life.
When I finally set up a will, I thought of her situation and made sure that I set up my beneficiaries in a way that will minimize their stress. I’d prefer that my loved ones can mourn properly and not be distracted by inheritence complications.
That said, I hope I am around a long time so that I CAN change peoples lives when I pass....
Dave Ramsey Fan ping list. If you would like to be added to this ping list, feel free to FReepmail a request to me.
Sorry all, I can not figure out why I keep double pinging!
Practicing the philosophy “I’m pinging like no one else so that later I can *ping* like no one else?”
;-)
Haha! Good one!
double pinged
Wednesday, October 03, 2012 9:12:52 AM · 9 of 10
CSM to Hoosier Catholic Momma; CottonBall; TenthAmendmentChampion; Chickensoup; JDoutrider; ...
Wednesday, October 03, 2012 8:16:26 AM · 7 of 10
CSM to Hoosier Catholic Momma; CottonBall; TenthAmendmentChampion; Chickensoup; JDoutrider; ...
My guess is that your ping list is doubled on the list.
I’ve been divorced nearly 3 years now (Yippee!) and I have my two best girlfriends (of 30+ years) in charge of my estate. My sister is untrustworthy, and my Dad isn’t able. It’s all spelled out VERY clearly in my Will and I have separate attachments as to who gets what. Yes, I have a steady beau, but I will NEVER trust a man with my finances again. I’m to old for that chit, LOL! End of conversation. :)
On a frugal note - get rid of all your extraneous cr@p already, would ya? It’s just plain CRUEL to make others clean up after you and deal with your JUNK when you’re gone. My beau and I are in the process of liquidating and disbursing all the the ‘stuff’ his deceased wife hoarded. It is absolutely no fun and a helluvalotta work! Be kind to those you leave behind! :)
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