Planning for your child’s future is one of the most important steps you can take to ensure they’re financially secure, even if you’re no longer around. One of the best ways to safeguard their financial future is by setting up a trust for your minor children. But if you’re new to trusts, you may have a few questions about this process.
In this blog, we’ll answer some of the most common questions about trusts for minor children to help you make informed decisions.
1. What is a Trust for a Minor?
A trust for minor children is a legal arrangement that allows parents and other relatives to leave assets to a child. A trustee manages the trust until your child reaches a specified age, usually between 18 and 25. Some assets in the trust may include money, property, or investments. This arrangement ensures the child’s financial needs are taken care of until they are mature enough to manage the assets themselves. Trusts can help protect a child’s inheritance, provide for their education, healthcare, and daily living expenses, and ensure your wishes are followed if something happens to you.
2. Why Should I Set Up a Trust for My Minor Children?
Setting up a trust helps ensure your minor children’s inheritance is managed wisely and protected until they are responsible enough to handle it themselves. It allows you to dictate how the assets are used. In some cases, you may want it to cover education, healthcare, or living expenses. A trust can protect your child’s inheritance from misuse, creditors, or bad financial decisions. If you pass away unexpectedly, having a trust in place ensures your child’s economic future is secure, giving you peace of mind.
3. Who Manages the Trust?
The trustee manages the trust and its assets for your minor children. This can be a family member, a close friend, or a professional trustee, such as a lawyer or financial institution. The trustee’s role is to follow the instructions in the trust document and ensure the assets are used for your child’s benefit. Choosing someone responsible, trustworthy, and financially knowledgeable is important. You can also name co-trustees, like family members and professionals, to balance personal insight with financial expertise.
4. Can I Change the Terms of the Trust?
Whether you can change the trust terms depends on the type of trust you set up. A revocable trust allows you to change or cancel it at any time during your life. However, once you create an irrevocable trust, the terms generally cannot be changed without court approval or agreement from the beneficiaries. Irrevocable trusts offer greater protection from taxes and creditors. Consulting an estate planning attorney can help you decide which type of trust best suits the needs of your minor children.
5. How Do I Choose a Trustee?
Choosing a trustee is an important decision. Select someone responsible, trustworthy, and financially savvy. This person will manage the trust and make decisions in your child’s best interest. It could be a family member, close friend, or professional like a lawyer or financial advisor. You can also appoint co-trustees, such as a family member and experienced trustee, to balance personal insight with expertise. Clearly defining their duties in the trust document can help avoid future conflicts.
6. What Can a Trust Pay For?
A trust can cover various expenses that benefit your minor children. This includes educational costs (like tuition, books, and supplies), healthcare expenses, housing, and day-to-day living needs. You can specify additional expenses in the trust document, such as travel, extracurricular activities, or a down payment on a first home. The trustee is responsible for ensuring the money is used as intended. By clearly outlining these expenses, you can ensure the trust supports your child’s growth and well-being.
7. Can the Trust Cover Special Needs Expenses?
If one or more of your minor children has special needs, you can create a special needs trust to provide financial support without affecting their government benefits, such as Medicaid or Supplemental Security Income (SSI). This type of trust can pay for things not covered by these programs, such as therapies, medical equipment, education, and recreational activities. It ensures your child enjoys a higher quality of life while receiving necessary public assistance.
8. How Do I Start Setting Up a Trust for My Children?
The easiest way to start setting up a trust for minor children is by working with a reliable estate planning attorney. Your attorney will help you decide which type of trust best suits your needs, draft the documents, and guide you through the funding process. During this appointment, you will need to discuss your financial goals, your children’s needs, and who you want as the trustee. Having a clear plan helps ensure your child’s future is protected.
Start Your Estate Planning Journey with Bishop Estate Law
If you are considering setting up a trust for your minor children, turn to our team at Bishop Estate Law for support. We’ve provided the most reliable estate planning services to parents across the Wasatch Front. With our team on your side, you can trust that we will protect your children’s financial future, ensuring they are cared for when you are no longer around.
If you would like more information about our trust services, contact us today for support.