Most people know that a trust can protect their children. A trust can be used to protect both young children and adult children. But how does a trust protect your children?
In the event of the untimely death of young parents, children are often the beneficiaries of the parents’ estate. This is either through a formal estate plan or, when parents have no estate plan, through intestacy and probate. However, young children are unable to handle finances. This can create problems.
This issue is avoided with proper estate planning. Many view estate planning as for the aged. While this is true, it is arguably more important for young families. No one wants to think about death, especially young people. However, proper estate planning provides reassurance and security. Estate planning is for everyone.
Why Young Parents Need Proper Estate Planning and a Trust
With proper estate planning, a young family establishes what happens in the event of the death of the parents. It establishes who will be responsible for physically caring for your children. It also establishes who will be responsible for financially caring for your children. These do not have to be the same person or people.
A trust for young children not only establishes a trustee for the estate, it also establishes the age when the children will receive control of some or all of the estate. Without a trust and accompanying rules, children will receive control of the estate at age 18. Often, this is not a good idea. Eighteen-year-olds are generally not mature enough to handle finances. Using a well-drafted trust, the proceeds of an inheritance can be distributed over time. For example, a trust may distribute 1/3 of the estate at age 18, ⅓ of the estate at age 25 and the remaining ⅓ at the age of 30. This protects children into their future as adults.
Using a Trust to Keep an Inheritance in the Family
Often, clients want to keep their wealth in the family. This means keeping the estate out of the control of a son-in-law or daughter-in-law. A well-designed trust can instead transfer some or all of the assets directly to grandchildren.
Unfortunately, marriages often end in divorce. A properly drafted trust provides not only for children of the deceased, but also for their grandchildren. This is sometimes referred to as a “dynasty” trust.
Be advised, it is in your best interest to discuss this type of estate plan with adult children first. Family harmony is always best.
Using a Trust to Protect Adult Children from Creditors
A well drafted trust also protects adult children from creditors. If adult children receive an inheritance without a trust, for example, as a lump sum, creditors can seize that money to satisfy the beneficiaries debts. Instead, a trust will use a trustee to ensure that the inheritance will help the beneficiary, but not be reachable by creditors to satisfy debts.
If You Are Considering a Trust
If you have a family, a trust is a good idea to preserve all you have worked for and to take care of your family. Contact the estate planning lawyers at Doane & Doane, PA. at 561-656-0200. Our estate planning attorneys have been serving clients in Florida for more than a decade. Let us put our experience to work for you and your family.