Navigating the intricacies of your financial legacy can be a daunting task. Understanding the nuances…
Parents with savings often want to protect their children’s future inheritances. Using a trust is a great way to do keep everything in the family bloodline.
nj.com’s recent article answers this question: “We have $1.5 million. Should we get a trust for our children’s inheritance?” According to the article, parents could first protect the assets for the benefit of the surviving spouse during the spouse’s lifetime.
After that, they can have the remainder of the assets pass in trusts for each of the children, until they reach a certain age or ages.
A lifetime trust is one that’s created during an individual’s lifetime. This is different from a trust that is created after a person’s lifetime through the operation of that person’s will.
Usually the individual who sets things up (the “Grantor”) will retain control over the assets, including the right to revoke the assets during his or her lifetime.
Another option is to have these types of trusts continue for the benefit of the grandchildren.
The children’s trusts can have instructions that the assets and income are to be used for the health, maintenance, education and support of the child.
The parents would need to name a trustee or co-trustee. This is the person who’s responsible for investing the assets, filing tax returns and paying taxes (if necessary). He or she will also distribute the assets, according to the terms that are laid out.
This is complicated business, so meet with an experienced estate planning attorney to determine the best strategies based on your circumstances and goals.
Reference: nj.com (October 16, 2019) “We have $1.5 million. Should we get a trust for our children’s inheritance?”