As a parent, I’m doing my best to set my children up for success. I’m working hard to teach them good financial management skills and work ethic. But if something happens to my wife and I before our children are grown, how can we know that our financial assets will be used appropriately?
There’s a simple answer - a trust! No, those aren’t just for the super-rich. They are a great tool to help give rules and structure on how you want your financial assets handled.
Unlike a will, which defines who inherits your assets when you die, a trust can also define how those assets are handed, which gives you the ability to keep your wishes fulfilled.
When do I need a trust?
To Provide Spending Guidance For Guardians
Asking someone to be a guardian for your child is a big request already; asking them to manage your children’s inheritance adds a whole new layer of complexity. How will the guardian know the boundaries of what money should be spent in raising your children and what should be saved for them when they are grown?
In setting up a trust, you can define how your money is distributed to guardians while your children are still minors. This gives you the ability to ensure that your guardians have the right resources to raise your children while reserving other portions for an inheritance when your children become adults.
To Provide Spending Guidance For Your Children When They Turn 18
Once your children are no longer minors, they have full access to inheritance money specified in a will. How do you feel about your child receiving a large inheritance on their 18th birthday?
While we each do our best to teach our kids good financial skills, we’d also like to know that money we saved up for college is actually going to be spent on college. With a trust, you can give clear direction on when money (or other assets) get distributed, to whom, and the conditions that apply.
With those directions, the person in charge of executing your trust can ensure that your children get your financial support even when you’re not there to give it yourself.
To Handle Special Requests Down the Road
You can create a trust to be around for a long time if you choose, allowing you to have reserve money set aside for things that are special to you and your family.
You might like to have money set aside to help pay for your children’s weddings. Or maybe you’d like to have your trust pay for a family get-together at a beach house every summer. A trust can be a great way to set up your inheritance to reflect your values and share those with your family on an ongoing basis.
If you don’t have a trust yet, Tomorrow Plus takes trusts to the next level to make sure your vision for your family is fully covered. Most people can complete their trust in less than a half hour.