The estate planning attorneys at Snee, Mahoney, Lutche & Helmlinger discuss the importance of creating a trust for minor children and explanations on how to do so.
A trust for minors is very similar to a trust for adults with the sole exception that the testator (or the person creating the trust) must appoint a custodian to manage the finances in the trust until the child reaches the age of majority or an age specified in the trust. You may include varying provisions that limit the custodian’s use of the funds, or limit the ability to withdraw funds. Trusts are very complex and you should enlist the aid of an experienced estate planning attorney when drafting a trust.
Carefully select a custodian. The custodian will manage the funds in the trust for the child until he becomes an adult. The custodian will be subject to reporting requirements of the probate court, so you should choose someone wisely. Many financial institutions have professional custodians who can manage the trust for a fee as well.
Transfer the funds or other assets you wish to be a part of the trust. The account should be titled “In Trust for [name of child].” Your financial institution will be able to take care of this step for you. However, it is a good idea to keep track of all communication you have with your financial institution. Note what was said and the date it was said.
Draft a trust document that specifically identifies the minor child, custodian you wish to appoint, a backup custodian, amount of the funds and location of the funds to be included in the trust. Consult an experienced estate planning attorney for assistance with this step.
Outline any provisions you wish to restrict the use of the trust funds. Some testators will specify that the trust may only be used to tend to the basic health, safety and welfare needs of the child until they are an adult. You may also note that the trust may be used exclusively for education expenses. Generally, trusts contain a provision explaining that the trust will dissolve and direct all assets to be distributed to the child when they reach a certain age.
Sign and date the trust document following all laws and regulations required by your jurisdiction. Some states require that the trust document’s signing needs to be witnessed by no fewer than two disinterested parties. These are individuals who are not named in the trust document. Provide a copy of the trust document to the custodian, backup custodian and child/children.
By following these five simple steps, you may have your wishes carried out if and when the unfortunate does eventually happen. However, having an estate planning attorney by your side may help ensure details are addressed carefully and are legally sound. For more information on trusts for minor children, contact experienced estate planning attorneys at Snee, Mahoney, Lutche & Helmlinger in Bel Air today.