If you are working on your estate plan and have children, one of the things you may want to consider is setting up a trust for your children. Trusts take assets out of your name and place them into the control of a third party (a trustee). That third party holds on to the assets in the trust, like a life insurance policy that has just paid out, until the qualifications for paying out the assets to the beneficiaries are met.
One advantage of a trust is that you can set one up to take care of your children’s financial needs long after you’re gone. A trust set up for your kids can have as many restrictions or requirements as you’d like.
Your children are better protected with a trust
With a trust, you have some control over what happens to the assets you pass on to your children. Instead of having assets transfer directly to your children through your will, you set up a trust that pays out only when they meet the right requirements. This could mean that they receive everything at 18 when they become adults or at 25 or 30 after they’ve finished college or graduate school. It’s up to you to decide what they need and when they should receive it.
How do you choose the right trustee?
Not everyone is a good choice for a trustee. A trustee should be someone who thinks the same way you do about the way you raise your children or handle money. Having a professional company handle the trust may be an option as well.
A trust is a good option for many people. If you have kids, consider using one or more for their benefit.