Do You Need a Trust for Children?
Trusts are a useful tool in estate planning. They can help preserve wealth and provide for control over certain assets during your life or after your death. One of the most common trusts are trusts for children, especially minor children. In considering whether your children need a trust consider the following factors:
- How old are the children?
- How mature are the children?
- What do you want the children to do with the money?
- How old do you want the children to be before giving them control over certain assets?
- Are there any special needs for the children?
Your answers to these questions are a good starting point to determine weather a trust is needed and worth establishing.
Considerations for Young Children
If your children or grandchildren are below the age of 18, we generally recommend that a trust be created for your children if you should pass away and they are your direct beneficiaries. Under Tennessee law, minor children cannot inherit and depending on the size of their inheritance, a guardianship would have to be established for the children to inherit the assets. One question you must answer in creating these types of trust is how old do you want your children to be before they can control the money you put in trust? We recommend that the trustee retain control over the assets until the children are at least a mature age. We do not recommend providing an 18 year old with significant assets.
Guardianship for Children
If minors are heirs of an estate or beneficiaries under a will and there is no trust in place and the assets exceed $20,000.00 a guardianship will have to be established. If the assets an individual child receives are less than $20,000.00 the Court may in its discretion release the funds to the parents, guardians, or those having legal custody of the child. If the Court decides to release the funds to the parents, the Court may place certain terms and conditions on the release of the assets. Additionally, the Court can decide to retain the funds and release the funds to the minor as it sees fit.
Trusts for Children with Behavioral Problems
In today's society, it is not uncommon to see parents want to limit access to certain funds that they may leave their kids. Perhaps a son has a drug or alcohol problem or a daughter has a large amount of debt and has spending issues. Whatever the case may be, many parents to not feel comfortable giving children with these type of issues substantial amounts of money without some limits on how it may be used. Under those circumstances, a trust would be a viable solution to those issues. A parent could name a responsible party as trustee and direct the trustee that the money could only be used to for the benefit of the child. The parent could limit the use of the money to education or healthcare, or even provide for housing. By limiting the use of the trust assets, it allows the trustee to preserve the balance of the trust but also provides a benefit to the child.
Children with Special Needs
If you have a child that has a learning disability, has a physical disability, or has other conditions that will effect their life for years down the road, creating a trust for the child may be a good idea. Whether a special needs trust is actually created or just a trust to support a certain expense they have, in most cases, children with disabilities would benefit substantially by having assets held in trust. For example, the child may be on Medicaid or Social Security Disability and placing your assets in trust at your death will allow the child to continue to qualify for these governmental benefits. Or the child may be fully autonomous and able to care for themselves for the short term, but long term will need support. A trust could be created to be able to provide support for the child should the need arise.
If You Are Considering Creating a Trust for a Child, Call Estate Planning Attorney John Crow in Clarksville
Planning for children can be a stressful and difficult decision. It is important to know your children and predict how responsible they will be the money if you leave it to them outright. If you have minor children or want to leave assets to minor grandchildren, we strongly recommend you consider placing these assets in trust. Give Attorney John Crow a call today at 931-218-7800 to discuss your individual situation.