Q: In doing our Wills, should I create trusts for my children?
A: In the event that you and your spouse (if applicable) should die before your children have reached the age of 18, a guardian must be appointed to take care of any assets you leave them. A guardian must be bonded and must file a formal accounting with the court annually. The guardian will often hire a lawyer and an accountant to assist with the requirements of acting as a guardian. It can, therefore, get expensive and the costs of all this will be paid from the child’s funds.
As an alternative, you could direct that a trust be established for minor (or older) children. The benefits to a trust is that a Trustee does not generally need to post a bond and the requirement to file an accounting could be waived. While there are costs associated with managing a trust, it can be less costly than having a court appointed guardian.
Even for children who may be over the age of 18, a trust may be a good idea to protect the child until a later age where the child might be more financially astute. There are also many other reasons to have trust established for a child such as the protection of assets from future claims of the child’s creditors, including a potential divorce.
A common trust for a child established under a Will may last through the child’ 20’s. Some clients even like the idea of the trust extending into later years, even to go so far as trusts to stay in place throughout the child’s lifetime.
As always, if you have any questions or would like to learn more, please contact me at firstname.lastname@example.org or 301-575-0313.
ABOUT STEVE SHANE
Steve Shane provides strategic counseling to clients in need of estate administration, charitable giving and business continuity planning while minimizing estate, gift, and generation-skipping transfer tax exposure. He offers legal guidance to clients on asset protection and the proper disposition of assets in accordance with the client’s objectives, while employing tax planning techniques such as the use of irrevocable trusts, life insurance planning, lifetime gifts and charitable trust. He is also experienced with drafting documents for business planning, the incorporation and application for exemption for Private Foundations and the administration of decedents’ estates.
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