Few tasks we attempt during our lives have a greater impact on our family than creating an estate plan. Proper planning can ensure the future of our children, whereas little or poor planning can have devastating effects on their lives.
Potentially, the worst thing you can do is to leave your property to your minor children outright. If you do, the probate court would actually control this money until your children are adults. Leaving property directly to adult children can also have pitfalls, depending on the responsibility and maturity levels of each child.
The best way to plan for minor children is by providing for them through a Common Trust. This can be created as a part of your will or trust. The trustee of the Common Trust can provide your children with as much income and principal of the trust as each child requires for his or her individual health, maintenance, support, and educational needs.
A typical Common Trust remains in existence until your youngest child reaches a specific age. When the Common Trust terminates, you can then leave each child’s share in his or her own Separate Trust, if desired, or allow outright distribution.
Separate Trusts can call for distributions of the trust principal over time. For instance, the terms of a child’s trust could provide that a child is to receive one-third of the trust share upon reaching the age of 30, one-third at age 35, and the balance at age 40.
The trustee of the child’s Separate Trust can be given the discretion to distribute principal and income for your child’s basic needs as well as special needs of buying a house or purchasing a business. If your child dies before the complete distribution of his or her trust share, you can control where the assets will then pass.
Leaving property to your children in trust as opposed to outright can protect your children from their own youth or inexperience with handling money. Many young people are overwhelmed by immediate and uncontrolled wealth, and their inheritance can prove to be a source of destruction rather than a blessing.
The key to proper planning for children is not simply to leave money, but to leave money intelligently.
WITH A SATELLITE OFFICE NOW IN PANGUITCH. Jeffery J. McKenna is a local attorney whose practice has been focused on Estate Planning for over 20 years. He is licensed and serves clients in Utah, Arizona and Nevada. He is a shareholder at the law firm of Barney, McKenna and Olmstead. If you have questions you would like addressed in these articles, please feel free to contact him at 435-628-1711.