How To Protect Your Family – A trust for minors is designed to hold property and assets for minors until they are of age to receive them. These trusts typically provide instructions regarding how money, property or other assets are to be held until the minor reaches the age of distribution.
With a trust for minors, you can ensure the financial security of your child after you die. You will also get to decide what will happen to the assets in the trust should your child, the beneficiary, die.
Additionally, you might even be able to avoid having to pay gift taxes on the trust. Trusts for minors often provide parents or guardians with ways to make sure the child spends the money or allocates the assets the way that you intend them to.
Your minor’s trust can be set up with the following intentions:
- Manage financial distributions.
- Determine when beneficiaries will receive funds.
- Decide how funds will be allocated.
- State what will happen to the trust should the minor die.
You may decide to set up the trust by way of a will or a living trust. You’ll leave the property to your child, but you’ll write in a provision that states something to the effect that if the beneficiary is still a minor when you die, the property must be placed within a minor trust account, which will be designated to a trustee.
As mentioned, the trustee will take care of the account on behalf of the child until the child turns 18 at a minimum. You’ll choose the end date for the trust, meaning you can select any age that you’d like, though you should know that by the time children reach their early-to-mid thirties, they will have matured as much as they ever will.
You can add details regarding the conditions under which your child is allowed to use the money and the assets, such as how much they are permitted to have access to as well as how often portions of the accounts are disbursed. A major benefit of a minor trust is that you can set it up to provide compensation in increments rather than releasing it all as a lump sum.
This method of distribution can ensure that all of the money is not spent right away. For example, you could permit a portion of the assets to be distributed when your child turns 25, while another portion is provided upon their 30th birthday, followed by the release of the remaining funds or assets when they turn 35. Ultimately, it’s all up to you and what you deem to be best for your child.
Minor’s trusts can be particularly useful if your child lives with a disability and you anticipate that he or she will need to pay for expensive medical treatment, rehabilitation or personalized diets throughout his or her life. Ultimately, setting up a trust fund for a beneficiary who is a minor can be a way for you to ensure that the inheritance you leave for your child is put to good use.
Keep the child protected
Creating a trust account for a minor is a way to ensure that the money you set aside for your child will benefit your child and not the guardian you’ve elected to act as the trustee. This means a trust account will allow you to guide the decisions and spending habits of the trustee even after you’ve died.
You can dictate how the money should be spent, whether that be for the general benefit of the minor or for expenses such as housing costs, tuition and health care fees. You can also decide to leave all of the decision-making tasks to the trustee and his or her discretion.
Additionally, you can even decide what happens with any trust funds that remain should your child die. For instance, you can explicitly state that any remaining money should be distributed to a blood relative, like a grandchild, as opposed to someone who married into the family, such as your child’s surviving spouse.
Alternatively, as mentioned, you could also provide your beneficiary with even more control by granting them additional powers or rights over the trust and how it works. This may include letting your child choose who the future trust beneficiary will be should your child die. You can even allow the child to become a co-trustee by saying so in your trust document.
Of course, the details of such a fund are very complex, and you need to consider the long-term ramifications of your decisions. Work closely with legal and financial professionals who have experience drafting the details and setting up trusts for minors.
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