In general, if an individual dies without an estate plan, their assets are distributed according to a formula determined by the state. In most instances, these laws pass wealth to both the surviving spouse and children. A properly-crafted estate plan gives you control over this distribution by allowing you to provide for specific people you designate and at a specific time. It is recommended that all parents of minor children create a trust that is designed to safeguard inheritance for their children.
This type of trust gives you the ability to outline how much money your children will receive, the age at which they will receive the inheritance, and to some extent how they are to spend this money. In this way, you can designate funds for their college education or distribute their inheritance at a certain age. This is one way to ensure that they don’t waste the assets on a fancy car as soon as they turn eighteen years old. This type of trust can also protect against potential creditors or even divorce.
Trust funds can be used to provide support to your children until they reach the age at which they may receive their inheritance. In your estate plan, you must name a trustee who can ensure this money is handled properly. This trustee may be different from the guardian selected in your estate plan, which is recommended if the guardian is good with children but not with money.
With a trust, you maintain a degree of control over your wealth after your death. In this way, you can provide for the future of your children. You can set aside funds for a surviving spouse, ensuring that your children will not struggle with money even if your partner is unwise with money or remarries.
Finally, a trust allows you to outline how the trustee is to budget funds for each child. If you have one child who has a special need or requires additional training to develop a talent, your trust may outline these appropriations. This is particularly important if you have a child with physical or mental disabilities who may require significant care beyond their 18th birthday.
Children are often the greatest assets that parents have, and are an integral part of the estate planning process. Your childrens’ well-being is only ensured with proper planning, and while most parents hate to think about the possibility of passing away before their children reach adulthood, it is essential that this be considered and an effective plan formulated. If you have not yet created a plan that adequately provides for your children, we encourage you to contact our knowledgeable estate planning attorneys today.