Do I Need a Trust for My Minor Child?
A common question parents have when creating their estate plan is whether they need a trust for their minor child(ren). While every situation is different, we do often recommend that you proactively set up a trust for your minor children as part of your estate plan. You do not have to be wealthy to do this! Setting up a trust proactively ensures that all money your children inherit (including any life insurance policies) are used for their benefit and/or as you would like for it to be used.
If you do not create a trust for your minor children, the court will name a guardian to manage assets on behalf of your children until they become adults. Once they turn 18, the assets will become theirs, with no strings attached. It is this fact that makes most parents consider putting together an estate plan with a trust for their minor children.
A Trust Gives You Control
As alluded to above, by creating a trust for your children, you can control not only when your children get access to the money, but what they can access the money for. Additionally, you get to select the trustee who will manage the assets for your children.
Often parents wish to allow some access to the funds at 18 for higher education purposes, and then slowly start to ease restrictions as the child gets older – and in theory, more mature. The trustee will be responsible for managing the accounts and spending the funds for the child’s benefit.
Additionally, a trust can allow for additional flexibility for the trustee and your children. A court-appointed guardian of the funds has to make frequent reports to the court regarding how the funds have been managed. A trustee does not usually have to do so, unless you require it in the language of your trust.
But Do I Need a Trust Right Now?
Not every familial situation will call for the recommendation of creating a trust right away, as there are a couple of potential alternatives. When you meet with us, we will discuss your situation and help you decide whether a trust, naming a property guardian, or naming a custodian under UTMA, is best for your case.
Name a Property Guardian in Your Will
You do not need to create a revocable living trust right now to reap the benefits of creating a trust for your minor child. One option to avoid some of the headache is to appoint a property guardian in your will. This person would be responsible for managing the assets left to your minor children. However, your children would still have immediate access to the funds upon their 18th birthday and the guardian would still have to make reports to the court regarding the funds and how they are being managed.
Name a Custodian Under the Uniform Transfers to Minors Act (UTMA)
Another option is to name a custodian to manage the property you are leaving to your minor children under the UTMA. In the state of Florida, if you die before your child turns 21 (and even up to age 25, if they are under age 21 at the time of your death), you can name a custodian and the property you are leaving to your minor child(ren). This can be done via a will or a trust. However, under UTMA, that money is outright transferred to the child once they reach the prescribed age. No additional restrictions can be made, including restrictions on how the funds can be spent.
Jacksonville Estate Planning Attorney
If you are in Florida and are interested in discussing whether a trust is right for you, contact us today. If you are ready to get started on your Florida estate plan, you can do so here.