How much do you trust your kids with money?

Most parents have the absolute best intentions when teaching their children about money, but even with some of the most financially savvy parents, sometimes the lessons don’t take – or they take time to kick in.  The solution – a Trust.

A trust can be a parent’s best friend if there are concerns about how a child may handle an influx of cash, especially an 18 year old. Would your 18 year old “invest” his inheritance in a shiny new car or know how to diversify her portfolio?

One essential component of a trust is that it allows YOU to put controls on the distribution of your assets and your wealth.  For example, you could elect to make partial distributions at predetermined ages throughout a child’s life, or select a trustee who will make the decisions on regular intervals of asset distribution.  A trustee may also be a good choice to manage the assets and make investment decisions that are better suited for those with the professional capacity to do so.  A trust may be best for children  in other circumstances as well, including children with alcohol or substance abuse problems or children in questionable relationships or marriages.

Trusts can also protect your heirs from a divorcing spouse or creditors.  In the case of a special needs child, a trust can be set up to provide supplemental financial support that doesn’t disqualify them for important government benefits.

One of the most commonly used trusts is a revocable living trust. With a revocable trust, you transfer your assets into a trust that you control while you are still living.  Then, upon your death, those assets pass to your heirs outside of probate (a lengthy, expensive and totally public court process).  Establishing a trust helps your heirs avoid the hassle and cost of going to Court and doesn’t tie up the assets, which are generally frozen during the probate process unless protected by a trust.

One of the main goals of my law practice is to help families like yours plan for the safe, successful transfer of wealth to the next generation.  To learn more about whether a trust is right for your family, call our office today to schedule a time for a Family Wealth Planning Session where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.

 

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