How can I set up a stipend in a will?

May 14, 2007 6:14 PM

LastWillAndTestamentFilter: Can I specify, in my will, that a certain beneficiary is to be paid by stipend, rather than by lump sum? How does this work? Details inside.

I am thinking about writing my will (no, I'm not suicidal or anything, thank you). I think that most of my wishes with respect to this are pretty straightforward, except possibly for one:

I want to split a portion of my estate equally among several of my relatives. However, one of them is a complete fucking doofus, and I am supremely confident that he would blow his inheritance within, oh, two weeks.

So, I would prefer to specify that he be paid by stipend, over some extended period of time. I strongly believe this would be better both for him and for my other relatives.

So, first, can I specify such a thing? Or does the fact that I bequeath something to him mean that he can do whatever he wants with it? He is an adult (chronologically, at least), and he is not (legally) incompetent.

Assuming that I can do something like this, um, how? More specifically:

I imagine that there might be stipend services, that will handle the stipend's maintenance, doling out, et cetera, in exchange for a percentage. But I also imagine that they might not bother taking on (relatively) small amounts. It would be a pretty good pile of money, especially from his point of view. But it's not going to be millions, or hundreds of thousands.

I do not want to push this responsibility on another relative of mine. There would be no end to the complaining that that person would have to bear - "Why can't you just give it to me now", blah blah blah.

In case it matters, this is in the beautiful state of New Jersey.

I understand that YANAL. If YAAL, please say so.

Thanks.

posted by anonymous to law & government (10 comments total)

The legal device you're looking for is a "trust," and you can absolutely create one through your will.

This isn't something you want to try without a lawyer, though.

The administrator of the trust is called the "trustee," and your relative would be the "beneficiary." There are professional trustees who will take care of things for a modest fee, and the aforementioned lawyer will be able to help you find a good one.
posted by Mr. President Dr. Steve Elvis America at 6:26 PM on May 14, 2007 [1 favorite]

I'm pretty sure what you're looking for is a testamentary trust

When you die, instead of giving money to doofus, you establish a trust, for which doofus is the beneficiary. You appoint someone else to be the trustee -- they manage the trust and make the payments do doofus in accordance with your instructions. (I think lots of banks can do this for you)

Trust and estate law varies by state, so call someone local, or at least do some searches on New Jersey law.
posted by jewishbuddha at 6:30 PM on May 14, 2007

Answer is yes, with a lawyer's help.
posted by Ironmouth at 7:38 PM on May 14, 2007

You're looking for a spendthrift trust. These are set up when the testator feels that a particular beneficiary cannot be trusted to make prudent financial decisions.

The trustee will dole out the money in whatever increments are specified by the trust. Creditors of the beneficiary cannot attach or be assigned the underlying trust assets, so there's less of a chance of an irresponsible son buying a Ferrari and telling the dealer to get it out of his trust.

These are fairly common, and any good estate attorney can help put this into your estate plan.
posted by reenum at 7:45 PM on May 14, 2007

hi, dad!
posted by Izzmeister at 8:19 PM on May 14, 2007 [1 favorite]

Hire an attorney to help you with this; it is really standard stuff and thus not that expensive. If you really must, buy one of the write your own will books which will even have a form for trusts etc. The hardest part is choosing an appropriate trustee, and then a back-up in case that trustee dies or becomes incapacitated. If you have more than a few hundred thousand at issue you should not try to do this without an attorney.
posted by caddis at 9:04 PM on May 14, 2007

erm ... yeah ... IAAL and like everyone else said google "testamentary trust"

You are the trustor
your responsible relative the trustee
your irresponsible relative is the beneficiary

It would look a bit like:

And I leave $amount to be held in trust by [trustee] for the benefit of [beneficiary] to be paid in x equal amounts annually over a period of x years. However [trustee] at their sole discretion may at any time decide to pay to [beneficiary] the remaing sum held on trust. It is my non-binding intention that [trustee] will only choose to pay out the remaining sum if [beneficiary] starts to act like an adult.

If [trustee] is unwilling or unable to act as trustee I nominate [option 2] or [option 3] to act in their place.

And I leave MeFi user Jannw $10,000 as thanks for his assistance in organising my testamentary affairs

Jannw
posted by jannw at 6:35 AM on May 15, 2007

And I leave MeFi user Jannw $10,000 as thanks for his assistance in organising my testamentary affairs

but if you leave that last line in poor Jannw will get disbarred ;)
posted by caddis at 7:05 AM on May 15, 2007

Oh ... and you can leave out the "However ....." bit to stop your responsible relative being pestered ... that way they can reply that they have no choice ... J
posted by jannw at 7:11 AM on May 15, 2007

Good advice here. To elaborate on what Mr. President Dr. Steve Elvis America said, a professional trustee is something to think about. Your lawyer can tell you whether it's a good idea based on your circumstances.

Since you asked, I'm a lawyer, and I've used the bank-as-trustee bit before. I'm afraid I can't say definitively, but I think fees were nonexistent or negligible (banks like it when you give them money). Again, your lawyer will find out for sure.

The benefit of all this is you don't have to put responsible relative in a position to be pestered (or, I suppose, tempted). Also, my experience (within my own family) is that sometimes even responsible relatives, though bursting with virtue and good-heartedness, are not quite up to fulfilling fiduciary duties. For instance, they may not read things as closely as they should or be completely up on the terms of the trust.

Since you're anticipating a problem of pestering, definitely ask your attorney about having a bank or other professional trustee.
posted by averyoldworld at 11:16 AM on May 16, 2007