Many of my clients are parents of children who are minors. These parents often ask me how they can transfer property to their children if they are minors at a time when the parents die. These parents raise several serious concerns about who will take care of that property and the timing of it being distributed to the children. A Minor’s Trust is an Estate Planning mechanism that can be used to protect property given to minors and provide for a plan of distribution. Here are three important things to know about a Minor’s Trust.
1. A Minor’s Trust Can be Included in a Last Will and Testament
While it’s true that a complicated Minor’s Trust can be a separate document, this type of trust is most commonly found as part of a parent’s last will and testament. The reason for this is because usually a parent distributes their property to their spouse first and then to their children if their spouse died before them. In this sense, a Minor’s Trust acts as a catch-all safety net used by parents to protect property so that it can be passed to their children.
2. A Minor’s Trust Does Not Have to be Supervised by a Court
Additionally, unlike property being passed to a guardian of a minor child, which then usually requires court-supervised distributions and reports, a Minor’s trust can be administered without Court supervision. Just like any other trust a trustee is named in a Minor’s Trust who holds the property and protects it so that it can be distributed at a later time to the child according to the terms and conditions of the trust. Usually the distribution occurs at a point in time when the minor is an adult.
However, most Minor’s Trusts also have provisions allowing the trustee to use portions of the assets in the trust for the immediate care of the child even while they are a minor. The reasons that distributions can be made are usually things such as providing Medical support, assistance with education, including college, and other similar types of items.
3. Distributions from Minor’s Trust can be Customized
Finally, I find that most of my clients like the third part of Minor’s trusts the most, which is allowing them to specify when distributions will be made to their children. Most parents recognize that while a child who turns 18 is legally an adult they are still not mature enough to take care of a large amount of cash or other valuable assets. For this reason a Minor’s Trust does not require a distribution of assets to the child once they become an adult at the age of 18. Rather a parent has the ability to specify in a Minor’s Trust the specific ages at which the trustee will make distributions from the Minor’s Trust to the children.
Many of my clients will create a staggered system of distributions starting with a specific age of say 25. Additional distributions will be made from the Minor’s Trust at age 30 and then 35 and possibly ending at the age of 40. This is just an example of how creative distributions can be in a Minor’s Trust. The goal of a Minor’s trust is not to create problems for the child but rather to provide a protective and systematic procedure for a parent to distribute cash or other valuable assets to their children in a way that won’t cause their children problems. Rather, the goal is to provide help and assistance to the minor children and probably most importantly, help them become independent and productive adults.
If you have any questions about creating a Minor’s trust please feel free to contact us so that we can answer your questions and assist you with your Estate Planning needs. Call us toll free at 877-232-6101 or 208-232-6101 for a consultation with Lane Erickson and the Racine Olson team of Estate Planning attorneys in Idaho. You can also email Lane Erickson directly at firstname.lastname@example.org. We will answer your Idaho Estate Planning questions and will help you solve your Idaho Estate Planning problems.
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