Law Offices of H. Andrew Reckson LLC
Contact Me Directly 301-893-7056

Should I set up a trust for my children’s inheritance?

As you start building your estate plan, you search for the best way to distribute your assets to your children. Setting up a trust can help protect your assets in multiple ways.

When you set up a trust, you choose a trustee, someone who manages the assets held in the trust. This is typically an attorney or a bank. The trustee follows instructions you leave for your money. Depending on how you set up your trust, assets may be delivered in one lump sum. Or they may pay out in smaller lump sums as your children reach certain ages.

You also have the choice of setting up a lifetime trust that distributes money throughout your children’s lifetimes based on needs. Instead of receiving lump sums, the money will be distributed according to your child’s needs or your wishes. That may mean a monthly stipend. You can also require the trust only pay for certain expenses like schooling or housing.

Although many may think only rich people set up trusts, anyone who has built savings and assets through the years may want to use a trust. Some reasons why a trust may be right for you include:

  • Protecting your inheritance from probate court – If you don’t have a trust, the inheritance you leave will usually go through probate court. It is much easier for your children and others to contest your inheritance in probate court. A trust can help prevent litigation if your children disagree on the inheritance.
  • Protecting the inheritance of minor children – A trust can provide peace of mind in the event of an untimely death of a parent. Children under 18 who have lost their parents receive a guardian. This guardian has control of any assets the child may have. If you leave the money in a trust payable after your child turns 18, the guardian cannot control it and has no claim to it.
  • Preventing someone from squandering an inheritance – Your child may not have good financial sense. Setting up a lifetime trust can prevent your child from receiving a lump sum. Instead, the trust will pay out over his or her lifetime.
  • Making sure your money goes where you want it – When you set up an irrevocable trust, the trust takes control of your assets. You technically no longer own whatever is in the trust, nor do your children until they receive distributions. The trustee, usually an attorney or a bank, distributes the assets based on your instructions. This ensures your money will go where you want it to.

A trust can provide clear instructions on how your inheritance should be distributed. This can help prevent conflict between your children. You should also factor in the age and spending habits of your children when deciding on a trust.

A trust can offer you a useful and smart way to protect the inheritance you leave behind.

No Comments

Leave a comment
Comment Information

Contact

Rockville Office
20 Courthouse Square
#205
Rockville, MD 20850

Phone: 301-893-7056
Fax: 301-841-7966
Map & Directions

Silver Spring Office
1734 Elton Road
Suite 210
Silver Spring, MD 20903

Phone: 301-893-7056
Fax: 301-841-7966
Map & Directions