Do you know what will happen to your minor children if you should pass away? Odds are, you know the importance of having a will and designating a guardian for your kids. But you may not know the best way to make sure they'll inherit the assets from your estate.
Conservatorship vs. Testamentary Trust
If you don't specify, assets like real estate, investments and cash from life insurance policies go into a legal conservatorship and are held until the child turns 18. They are really limiting in one respect because no funds can be taken from the assets without court permission -- even for a medical issue, vehicle or special trip. On the other hand, once the child turns 18, he or she has the whole amount at once with no restrictions on spending.
A testamentary trust, on the other hand, allows parents to specify at what age the child should get access to the trust funds -- perhaps at age 25, or after graduating from college or post-graduate studies. Exceptions can be made by the legal trustee to offset the cost of care, pay for medical or educational expenses, start a business, buy a house or fund a wedding.
Role of the Trustee
With a testamentary trust, choosing the right trustee is crucial. The person should be highly trustworthy and able to discern which types of life events are suitable for disbursing funds.
You will also want to have a conversation with the person you are considering as trustee. If for any reason he or she declines to act as trustee, the court will take over the responsibility or appoint someone to manage the trust. This may not be what you had in mind, so make sure you are appointing someone who will be willing and able to act as trustee.
Setting Up a Testamentary Trust
It's relatively simple to create a testamentary trust and should be done with your estate lawyer when you create or modify your will.
The trust is actually created when you die, and must go through probate, which is the process of proving the will is valid, identifying all of the deceased's assets and paying any debts owed, as well as taxes. If you would like to avoid this step, you can talk to your estate planner or attorney about other options, like a living trust, that can achieve your plans for passing on an inheritance to your children.
For more information, contact a company like Beck Law Office PC LLO.Share
7 May 2015
After my mom turned 68 years old, she started doing all kinds of strange things. She spent her monthly retirement checks on excessive amounts of food and clothing but didn't pay her rent or bills on time. At one point, she forgot who I was to her. Since my mom lived alone at an independent apartment complex, I couldn't monitor her behavior every second of the day. I brought these things to my mom's attention, but she refused to get medical help. After my mother called the fire department to report a fake fire, I took legal action. I contacted a general attorney and became my mother's power of attorney. I now had the right to monitor my mom's finances and medical care. If your loved one needs help, read my blog for information on general attorneys. You'll find tips, articles and much more to help you get started.