The estate planning attorneys at Deckert Law can employ many types of trusts for various purposes depending on the client’s needs and preferences. Today we’re going to talk about one of the most-common trusts used in estate plans at Deckert Law and why you might need children’s trust language in your will or trust.
Why would you need children’s trusts? Minors cannot inherit assets directly. If you want to include persons under 18 as potential beneficiaries in your estate planning, it is paramount that your testamentary document include children’s trust language. Otherwise, there would be a court-supervised conservatorship, so the court would control the money until the child turns 18, at which point the child(ren) would receive the entire inheritance directly. Additionally, the court generally has to treat every child equally. Because court supervised conservatorships are expensive, time-consuming, and do not allow the conservator to invest freely and earn market-rate income on the inheritance sum, and because most 18 year olds are not financially responsible, we will recommend a children’s trust if you want to include minors as primary or secondary beneficiaries in your estate plan.
What does a children’s trust do?
If you set up a children’s trust in your living trust or will, you select the person (known as the trustee) to manage the assets for your children, not the court. The court does not supervise the trust administration. You get to select when children receive the assets, so instead of them receiving an inheritance in full at age 18, you can choose that they receive the principal at certain distribution ages. Each child’s needs and circumstances can be accommodated by the trustee, just as you would do for your children. The children can receive distributions before the distribution ages for their health, education, maintenance and support. Assets that remain in the trust are protected from the court, irresponsible spending, creditors, and divorce proceedings. Finally, the trustee can invest the money in the trust how you would instead of being restricted to only court-approved investments.
If you have minor children, you should have an estate plan that financially provides for your child(ren) and the attorneys at Deckert Law would be more than happy to discuss your needs and preferences and create a plan for your family.
–Posted by Steven G. Deckert
