There are many benefits of having a trust set up for your children. In this article, we discuss a few of them.
Every parent wants to set their kids up for success, and one step that they can take to accomplish this is to seriously consider setting up a trust for them. Aside from the potential tax savings and security that trusts offer, here are some of the best benefits your children could receive if you decide to create a trust in their name.
4 Benefits of Setting Up a Trust for Your Kids
- Guarantee funds for your children.
- Provide long-term care.
- Authorize approved uses.
- Set conditions to pay out at a certain age.
1. Guaranteed funds for your children.
One of the reasons that many parents choose to set up a trust for their children is the protection that it offers against legal claims. While many assets are subject to seizure by creditors and the courts, those set aside in a trust are not.
Nobody knows what their fortunes hold. Even successful people run into financial trouble. Setting up a trust can ensure that your children don’t suffer the consequences of your mistakes.
2. Provide long-term care.
Some parents may worry that their children will not be mature enough to handle the amount of money that they want to leave for them. A trust can help make sure that your children cannot make impulsive purchases or unwise financial decisions. This estate planning tool allows you to determine how much and how often your child can receive funds.
3. Authorize approved uses.
When you set up a trust for your kids, you can even state what they are allowed to spend the money on. Depending on how you want your children to spend their inheritance, you can reserve the money for major expenses such as college, a down payment on a home, or starting a business.
4. Set conditions to pay out at a certain age.
Many 18-year-olds are not ready to handle the responsibility of a large or even modest inheritance. A little more maturity is needed. Some parents choose to set a certain age when their adult child can access the funds. In some cases, 25 seems to be an adequate age for an adult child to have gained the maturity needed to be financially responsible, though there is no standard. You know your children best, so base your decision on what you think will help them most in the long run.
Interested in learning more about the benefits of having a trust?
As you can see, trusts are highly customizable tools that can take into account your family’s circumstances and needs. If you are interested in learning more about how a trust can give your children the security they need to succeed after you are gone, we would like to sit down and discuss what you need. Contact us today to set up a consultation.