Issue with divorced wife and setup of trust for kid's education

[weeble9898]

I am a resident of Baltimore, Maryland and I have a question regarding the setup of a living trust. My ex-wife and I owned a house together until very recently. We sold the house and received a check for about $80,000. We are interested in using this money to fund our daughters' educations. I suggested a trust that would allow only the children to have access to the money and only for college. I need to know how much it would cost to set up and maintain a trust like this. I realize that it is not a tremendous amount of money, but it would surely take a bite out of the kids' education expenses. I have read that trusts can cost upwards of $1000. Are there any other options? She suggested that she put the money in an account in her name and have a contract written up stating that it would only be used for the children's schooling. I would do this but she already broke one contract with me and I don't so much trust her.

Thanks in advance

 

[anteater]

Is there are reason why you and the ex have to be "tied together" in this? Do you really want to restrict access to only the children?

Why not fund a 529 college savings plan for each daughter? Maryland allows a state income tax break on contributions to its plan.

Up to $2,500 for each account owner per beneficiary per year, with a 10-year carryforward of excess contributions; only contributions made by the account owner are deductible; providing the account holder has not taken a tax deduction on the contributions in the past, rollover contributions are deductible. Contribution deadline: December 31 postmark.

And T. Rowe Price is a pretty good mutual fund company.

 

[curb1]

Yes, a 529 plan. Check it out. The plan can be transferable between siblings (and other close family members) if necessary. The assets gain tax free.

 

[weeble9898]

An agreement has already been made in mediation that this money will only go towards the children's schooling. I am actually excited that most of my kids' schooling will be covered. I wish that I could feel comfortable with a personal agreement with my ex, but I feel that I really can't trust her to follow through. I feel that if the account is in her name that she may take money out to fix her house (or car etc...) figuring that she would pay it back later and not do so and end up nickle and diming the account to death. She has already broken one contract with me and gives me no reason to believe that she would not do it again. Though there would be legal recourse, you can't get blood from a stone and I would like to avoid this scenario altogether. I am sure that she would not allow an account in my name either. I do not want to hold a joint account with her because I want to have as little to do with her as possible. I feel that a trust is a reasonable answer because then I would only have to deal with the trustee and I could be sure that the money would go where it is supposed to go. I was under the impression that a trust could be applied to any type of investment, at least that is what my ex's financial advisor led me to believe. I am still kind of stymied about the whole situation. I simply want to be confident that my ex cannot piddle away this nestegg on meaningless crap. What are my other options? any ideas?

Thanks again

 

[curb1]

Yes, a 529 plan.

 

[Dandy Don]

Are you all going to put all of the money into a college fund or just part of it?

You should be consulting your own financial planner to get answers about how to accomplish what you want to achieve and who will control the trust account. Do you trust your wife to disburse the funds at the appropriate time or do you want an objective independent third party, such as the trust department of a bank, to manage this money for you? You can do what you want with your share of the money and let wifey do what she wants with her share.

DANDY DON IN OKLAHOMA ([email protected])

 

[lwpat]

I would insist that all of the money be placed in trust with a third party. You are right not to place it in an account under her control.