Estate planning can involve a variety of different challenges, depending on your financial and family situation, and your specific wealth goals. Among the many challenges folks face in estate planning is addressing wealth distribution to minors. Because minors are unable to own property on their own, it is important to use estate planning as an opportunity to provide for the support of children.
There are a variety of ways to do this, but trusts are a particularly useful tool in this area. The reason trusts are so useful is that a parent or grandparent is able to leave behind financial support for a child while leaving it to a fiduciary to ensure that the wealth is used for its intended purposes.
Trusts themselves come in a wide variety, and it is important for parents and grandparents to work with an experienced attorney to ensure they use a trust form that meets their needs and which will accomplish their goals. For minors, graduated distribution is a common strategy in structuring a trust. Trusts for the benefit of minors can differ in how much control a grantor retains over the assets. Also, different types of trusts have different consequences in terms of taxation and creditor access, so it is important to be informed on these aspects of trust creation.
Establishing and sustaining a trust does cost money, but for those who can truly benefit from a trust, the money they put into the creation of the trust is often worth it. It does depend on your circumstances, though, and that’s why consulting with an experienced estate planning attorney to determine what is right for you is important.