Part 2 of a 2-Part Series
Last week, we began a two-part series about how to provide of your children in uncertain times. Click here to read that post. This week, we offer part two in the series, where we discuss the importance of setting up kids’ trusts.
Create a Trust for Kids
People prefer trusts over custodial accounts. They offer more flexiblity. Also, kids’ trusts protect the funds against your children’s future creditors and their own imprudent spending. Name someone adept at handling money to manage and disperse the funds. This benefits your children if you die before they reach adulthood—or the age you decide to distribute funds to them. This can be the same person who will act as the children’s guardian. Or name a different person as a guardian (e.g., an ex-spouse) to handle the money you leave to your children.
Kids’ Trusts
Set up a kids’ trust to manage your money and property. Establish a revocable living trust with yourself as the trustee. This type of trust will remain in effect if you pass away. The successor trustee you name will manage funds and make distributions for the benefit of your children. The successor trustee can also step in to manage and distribute the funds for your benefit. Often less preferable, include provisions for the establishment of a trust at your death. This type of trust will not go into effect until your death. In addition, funding waits until execution of probate, an expensive and time-consuming process. Creating the trust through your will, means probate court will oversee management and distribution of funds.
Guardianship for Kids
The trust terms specifies the purposes for using trust funds. It also notes how and when the trustee should make distributions. And, it spells out the age at which you would want trust funds fully transferred to your children. This does not have to be at the age of majority. You can choose the type of distributions you believe are best for your children: Some parents give the trustee the discretion to make distributions for specific purposes, such as the children’s health, maintenance, education, or support, or even for a down payment on a house or to provide funding for the child to start up a business. Others give the trustee complete discretion in making distributions for the benefit of the children. Time distributions to meet your particular goals. Spell out your wishes in the trust.
Guardianship Rights
If you have more than one child, you can specify whether the distributions should be for equal amounts or if a greater percentage of the money in the trust should be distributed for the benefit of certain children, e.g., children with special needs or younger children who did not get as much financial assistance from you while you were alive. In addition, you can address specific issues that may be of concern. For example, you can indicate whether you would like a home you own to be sold, or if you prefer for the children’s guardian to move into the home so they will not have to relocate. If your home is not sold, the terms of the trust can also indicate who will be responsible for paying the real estate taxes, utility bills, and maintenance expenses. The home is a particularly complex issue to consider, as there are often emotional ties and memories connected to it, as well as ongoing costs, and frequently, a mortgage. As experienced estate planning attorneys, we can help you think through the best course of action for your family.
Consider writing down your wishes regarding grandparents’ visitation
If you have named someone other than a grandparent (your parent) to be your children’s guardian, it is important to specify in your estate planning documents whether you wish the grandparents to be able to visit with your children.
While you are living, it is your fundamental constitutional right to determine whether–and how often– your children will see your parents (their grandparents). However, when you pass away, grandparents may have a right to see your children. Every state has enacted a grandparent visitation statute, and they vary regarding their permissiveness or restrictiveness. Some statutes only allow grandparents to obtain a visitation order when the children’s parents have separated, divorced, or one or both of them have died. Others are less restrictive[1] and allow grandparents to obtain a visitation order even if the parents are still married and are both still living. What both types of statutes have in common is that they both require visitation not to interfere in the parent-child relationship and to be in the best interests of the child.
About Skvarna Law Firm in Glendora and Upland, California
Skvarna Law Firm operates offices in Glendora and Upland, California. We provide legal services for individuals living in San Bernardino, Los Angeles, Orange and Riverside Counties. This includes several cities — Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Pomona, La Verne, Montclair, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma. Visit SkvarnaLaw.com to learn more.
