Creating Trust funds can be overwhelming and there are quite a few things to take into consideration. When it comes to leaving large sums of money or assets to your children there are some general tips and advice to follow before setting up a plan.
- Assets of minor should be held in Trust-While children are under he age of 18 you do not want them inheriting money without a guardian. It’s important to find someone that is smart with money and will have your children’s best interest when it comes to being on top of the funds.
- Being 18 has it’s issues-In many states when a child turns 18 they are then able to have control of the inheritance. Having 5 million dollars at the age of 18 can seem like a lifetime of money. But if they are living carelessly and spending frugally then by the time they are in their 40’s they will hardly have any money left.
- Create separate shares for kids in their 20’s-A lot of people will divide the trust into shares for their children instead of having them all use one share.
- Consider a lifetime trust-This is where instead of giving your child full control to the funds at a certain age, it is now protected and they are able to distribute money but not take out huge amounts of cash in demand.
- Protect your children-If you have a child that has problems with substance abuse or gambling you need to consider lifetime trust.
- Give your kids a longer leash-If you are confident in your child and believe they will be fine with handling money then try distributing money at different stages.
- Plan for death by “powers of appointment”