Establishing a trust for your children can be one of the most impactful decisions you make in securing their future. They can not only safeguard your assets but also ensure that your young children have financial stability and guidance long after you are gone.
Here are three compelling reasons to consider setting up a trust for your young children.
Minors cannot inherit directly
Children under the age of 18 cannot inherit assets directly. If you die without a trust in place, assets for your kids must pass through probate. The court will appoint a guardian to manage these assets until the children are adults.
Unfortunately, this may not align with your wishes for how the assets should be managed. A trust empowers you to designate a trusted individual to oversee the assets for your children’s benefit.
Distribution via a will can be risky
Relying solely on a will to leave an inheritance for young children comes with risk. Wills can be contested, leading to family disputes and potentially altering your intended distribution plan.
A trust facilitates a smoother asset transfer and shields your children’s inheritance from challenges, creditor claims and administrative delays.
Reckless spending in young adults
Young adults often lack the maturity and financial responsibility needed to manage a large inheritance. By establishing a trust, you can set specific terms and conditions for how and when the assets will be distributed. This can prevent reckless spenders from depleting their inheritance and helps ensure the assets support their long-term stability and well-being.
These are just three examples of the power a simple trust can wield. Having experienced estate planning guidance can help you make the best decisions for your children.