A trust for minors is typically established as a strategy to protect assets and distribute property to children without allowing them immediate access to their inheritance. Typically, minor trusts come with instructions that specify when the funds, estate, or other assets may be released to the minor. Trusts for minors are a great approach to guarantee your children's long-term security and financial future after your passing.
Establishing a trust for a minor serves a number of purposes:
- Proactively plans for the distribution of finances.
- Sets up a timeline as to when the beneficiaries will receive the funds.
- Defines how the funds should be allocated.
- Addresses the plan of action should the minor pass away.
You can also choose between a living trust and a will. Each brings unique capabilities. Let's discuss some of the options you'll have.
1. Any property left to a minor can be managed by an adult trustee, either of your choosing or court-appointed, who will administer the funds on the minor’s behalf. You can determine the age at which the trust funds become available to the minor for use. For instance, you may feel that a young person lacks the maturity to make good financial decisions. Simply specify the age, and the authority remains with a trustee until the young person reaches the appropriate age.
2. You can set up the trust fund to disperse the money in installments rather than having a flat payment. This can be done as a safeguard to make sure that all of the money isn’t spent right away and it may have tax benefits.
3. You can also restrict the funds to housing, educational, and medical costs. You can choose to include a secondary beneficiary; maybe a grandchild, or to exclude a person’s access to the inheritance completely.
4. Maybe the recipient has a mental or health condition that prohibits the ability to administer the funds on their own, or maybe you're caring for a minor who has special needs and will require medical care throughout life. In these cases, you can choose to assign a permanent trustee.
As you can see, a Minor Trust offers tremendous flexibility and the structure will impact the lives of the people that you leave behind, and your legacy.
If you need help creating a Minor Trust or want to discuss your options, contact Ohio attorney Chuck Bendig.
