When most people think about Trusts, they think about the ultra-wealthy. But they are wrong. You don't need a lot of money to fund or manage a trust, and there are many benefits of using one. Here are just a few:
1. Minors can't inherit money. Because minors can't inherit money, the most seamless way to give minors money is through a Trust. You can set up the Trust to pay for the education and maintenance of young kids and, when they turn 18, you can start to distribute assets outright.
2. Your kids can receive their inheritance over a period of time. There are lots of statistics showing how unearned money spends differently than earned money. Whether the money comes from an inheritance, the lottery, or some other source, if the recipient didn't earn it, statistics show they will spend it more quickly and possibly more frivolously. A good way to prevent this from happening is to set up a Trust for your kids. Through the Trust, you can direct that the money gets dispersed over a period of time- e.g. 1/4, at age 25, 1/4 at age 30, 1/4 at age 35, and 1/4 at 40 (or however else you choose).
3. Their inheritance will be protected from creditors or failed marriages. Life doesn't always go as planned and if your kids have financial troubles or a bankruptcy, you don't want their entire inheritance wiped out. You can avoid this by putting the money in a Trust because, so long as the money hasn't yet been distributed, it should be protected. Likewise, many young people find themselves in a failed marriages. Money held in Trust won't be split two ways if your kids get divorced.
These are just some of the reasons to set up a Trust for your kids. We are happy to sit down with you to discuss the pros and cons during a complimentary consultation.