If you die with a will or intestate (without a will), the probate court has no discretion to withhold money from your legal heirs if they are 18. There are many 18 year olds who are not capable of managing significant amounts of money at that age. One way to insure that your children do not receive distributions from your estate at such a young age is to create a children’s trust or build one into your own revocable living trust. In either case you can be creative as to when your children receive distributions and for what purposes.
A trust can structure your child’s inheritance by making specific provisions for the use of trust assets. As an example you may provide that upon your death, a family member will be the successor trustee who will use the trust assets for the “health, education, maintenance, and welfare” of the child. Will that include money for vocational training or starting a business? Will the trustee have the discretion to buy a car for the child to go to work or school? These are some issues your trust provisions can address.
What about distributions when the child becomes an adult? You can specify in the trust that distributions be made at age 25, 30, or 35 or any other intervals you wish. You can specify that a distribution be made upon graduation from college, or that there is to be no distribution at all until the child turns 35 or 40.
You also have to decide what happens if the child dies before all distributions are made. Do the trust assets pass to their children or to the other beneficiaries or perhaps to charity? Another decision is whether the trustee of the trust should make a yearly accounting of the trust assets. Some people put spendthrift provisions into the trust ( preventing the child from borrowing from the trust) or provisions about substance abuse.
A trust for your children can put your mind at ease about the financial future of your children. If you would like a children’s trust set up or one incorporated into your own living trust, call us or e mail us at Law Office of Scott C. Soady, A Professional Corporation to set up a complimentary appointment