Why Parents of Young Kids Need Testamentary Trusts for Children?
Most parents fear death for the sake of their children and worry what would happen to their children in the unfortunate event of their untimely death.
Parents plan what they would leave for their children in the event of their passing to plan for the children’s financial well-being. All parents should have a plan in place for how your assets will be transferred to your children if tragedy strikes, and your children are left without parents. A will that nominates a guardian to take care of your minor children and includes a children’s trust will go a long way towards ensuring your children’s financial future will proceed as you intend.
What happens if parents decide to skip making a will? Individuals under the age of 18 cannot inherit property directly in Florida. (Fun fact: Minority renders an individual incompetent under Florida Law.) If you die without a will and are not survived by a spouse, your estate would pass to your children. However, if your children are minors, a guardianship would be established. The assets would be placed in a custodial account, which the guardian could access for the child’s benefit until the child gains control of the account at age 18, although it is possible for funds to remain in custodial accounts until the child is 25. If you want control over how your assets are transferred to your children and control who will manage those assets without court intervention, a testamentary children’s trust is a necessity.
What is a testamentary children’s trust? It is a trust that is set up in a will. This is not the type of trust you put your assets in during your lifetime. Instead, a testamentary trust becomes an asset-holding receptacle after you die. The personal representative of your estate will transfer your assets to the trust pursuant to the terms of your will. In your will, you will designate a Trustee to manage the assets to be held in trust for your children, and direct distributions to be made for children’s health, education, maintenance, and support. You can also designate ages at which your children would inherit outright any balance remaining in the trust once they have reached the age of majority. The ages and standards of distribution are adjusted to reflect individual family circumstances and priorities. Drafting an effective testamentary children’s trust is a complex process, and the advice of an estate planning professional can help you achieve your objectives.
Modern families have modern money concerns even if they are not wealthy. A solid estate plan helps address these concerns. We are happy to guide you and discuss the details of setting up a testamentary children’s trust with you.
