Estate planning can be complicated, yet necessary, in order to protect your loved ones in the event of your death. Parents with young children have specific concerns that others may not. One estate planning tool that is often overlooked by parents with young children is the use of a trust. A trust can be an integral part of an estate plan for parents with children that have not yet reached the age of majority.
Although there are many different variations of the basic trust, they all share the same essential elements. A trust requires a grantor, a beneficiary, a trustee and trust funds or assets. Despite what many people think, trusts are not only for those with substantial estates or assets. A trust can be created by anyone and is often an excellent tool for estate planning when minor children are involved.
A trust offers a number of advantages to estate planning for young children. By creating a trust, you are able to appoint a trustee to oversee and administer the trust. This not only allows you to have continued control over the use of the funds even after death, but allows the trust funds to grow over time. When structured correctly, your children may have income to provide for their needs while they are minors as well as a lump sum to inherit when they reach the age of majority, or at a later age as determined by you.
Substantial liquid assets are not necessary to create and fund a trust. Any number of sources can be used to fund the trust, including real property, savings, or even life insurance or retirement proceeds in some cases. Consult with your estate planning attorney to find out whether a trust is a viable option for your particular estate planning needs.