How Important Is Having a Trust if You Have Minor Children?
As an estate planning attorney, I am granted the unique and rewarding experience of helping families establish the necessary and basic legal protections to protect their family. The type of planning I am going to discuss is not a viable option if you have minor children.
However, whenever I have this discussion with families with young children I am always asked:
“Dan, I have heard a lot about having a trust, is that important if you have a young family and not a lot of money?”
The Question of how You Want to be Legally Protected
First, the term “a lot of money” is different for everyone. A lot of money to one person may be millions of dollars, and a few hundred thousand dollars to another. Therefore, I usually respond that the determination of whether or not to set up a trust as part of their family’s basic legal protections, is rarely if ever about how much money you own. The question is really based upon the manner in which you want to protect your family and children.
Second, a trust may be an appropriate strategy for you and your family. As an example, let’s say that you have a home worth $350,000, savings accounts and other investments totaling $100,000, and life insurance of $1 million. If you die with minor children, you suddenly will have an estate of approximately $1,450,000 going to your children. Without the proper legal protections in place, the $1.45 million estate will be going directly to your children, completely unrestricted at age 18.
Your Children’s Guardian
In addition, if your kids are under 18 when you die, your kids cannot inherit any assets from your estate. Your kids’ guardian (hopefully you named one) will be managing those assets for your kids until they turn 18. If you have not named a guardian, this person will have to go to court to be named guardian, manage their inheritance, and file a report once a year with the court about the assets and how they are being managed.
Not too many of us know many 18-year olds who would be responsible upon receiving $1.45 million all at once. In addition, that inheritance could be lost due to your children’s future divorcing spouses, lawsuits, creditors, and other predators. It is important for young families to understand the necessity for basic legal protections for their children, and that a trust as a planning strategy is not about how much money you have, but how you want to protect your children.
For More Information
If you have questions about estate planning and establishing the basic legal protections for you and your family, please contact our office at (513) 241-0400 or use the contact form on this website to schedule a time to speak with one of our Estate Planning Attorneys. We look forward to hearing from you!