Readers may be uncomfortable with the idea of turning control of property and/or other assets over to a trustee, despite the much-touted benefits of trusts in estate planning. This post will attempt to put such concerns to rest.
First and foremost, estate planning must be done from the perspective of love — for one’s spouse, children and/or future generations. No one can predict when a serious accident, incapacitating illness or tragedy will strike, so it is important to have a mechanism in place that will ensure that surviving loved ones will be financially secure.
In the scenario of young children, an irrevocable trust might be an option. Through specific guidelines, a trust can set the terms by which a trustee pays interest and/or principal out of the trust to beneficiaries. A common limitation might be preventing minor children from taking control of a trust until they turn a certain age or complete college. Trust assets managed on behalf of a minor child will most likely also be immune from the reach of creditors, ensuring that a child’s inheritance will survive until the child reaches adulthood.
In the event of tragedy, the last thing that survivors may want to think about is money. Alternatively, emotions that run high in the event of a loved one’s passing may lead to fighting among heirs. By having a trust in place that clearly allocates assets to various beneficiaries, such fighting or distress may be avoided.
As these examples illustrate, parents of young children should not delay or postpone estate planning. For more information on how to start this process, check out our firm’s website page about estate planning for parents of minor children.