If you have young children, protecting them by providing for their future can be one of your primary estate planning goals. And you might do this by leaving a sizable sum of money or your entire estate to them.
However, inheriting a lot of money can be a shock for children, especially in the wake of a parent’s death. In this situation, having a trust in place and assigning a responsible trustee to administer the trust will be crucial.
Benefits of a trust
A trust can be beneficial for several reasons. Depending on the type of trust, you can decide specifically where or to whom your money will go. Additionally, assets in a trust will typically avoid the probate process, which means that you can be saving your children time and money by putting property into a trust.
You can also set limits on when the trustee releases funds to a beneficiary, which can be especially important when the beneficiary is a child or young adult.
Managing the administration of a trust
Administering a trust is a major responsibility. As a grantor, or the person setting up the trust, you might decide to specify when a trustee will release funds or a portion of the funds. For instance, you could tie payments to events like college graduation or marriage. Or you could earmark certain funds for specific needs, like buying a home.
You should also use caution when assigning a party to administer the trust. As this article notes, this person or persons should be trustworthy and responsible. The administrator should be healthy and capable of carrying out their duties. This party should also understand the consequences of mismanaging a trust and be open to asking for help if necessary.
Establishing a trust can be a wise planning decision for many parents across Wisconsin. However, it is also important to ensure you set the framework to ensure the trust is administered properly and in accordance with your wishes.