Trusts are an increasingly popular tool that parents used to structure the inheritance they leave for their children and even protect the kids from certain dangers.
Your family doesn’t need to have millions of dollars in assets to make a trust a worthwhile tool when planning for your estate and the legacy that you want to leave.
Countless household situations can make a trust a worthwhile investment when you have children, including the three relatively common scenarios below.
- You have an older child with behavioral issues
Sometimes, adult children make decisions that endanger their safety or financial stability. If you have a child who has a history of overextending themselves on credit cards, gambling or substance abuse, a spendthrift trust could help protect them from squandering what you leave behind. You get to set limitations on what someone uses their inheritance for, when they access trust assets or how much they can use at once, helping protect an adult from their own worst impulses.
- You have a child with special needs who requires extra support
If you have a minor or adult child with special needs who cannot live independently, a special needs trust can help provide guidance and outside support for your child after you die.
A trustee can serve an important role in overseeing the financial and medical needs of a beneficiary, and a trust can augment the quality of life that your child will have.
- You have children who don’t get along
Whether they are teenagers or adults with their own kids, siblings who fight can cause a lot of stress to the people who love them. Intense sibling rivalry might lead to one child challenging the estate plan or trying to squander assets so that their siblings can’t have anything.
Having a trustee who isn’t one of your children oversee the administration of your estate can prevent one person from benefiting more than others. Additionally, using a trust will make it harder for people to challenge your wishes or undermine your legacy.
Trusts are versatile tools that give you more control over the use of your assets and that can limit tax issues and other concerns. Consider adding one to your estate plan when you have children.