As a parent of a young child, you know that your number one priority is your child's safety and security. On a daily basis, you enact this priority a hundred different ways: from checking the car seat, to cutting up their food, to putting child locks on all the cabinet doors. All of these small acts of love are done to safeguard your young child from any possible danger.
Being the parent of a young child is a full time job, and sometimes the sheer number of things that can go wrong can feel overwhelming. You can only protect your child from so much. But, there is one thing you can do (that doesn't take too long!) that can protect and provide for your child for years to come.
Using a Trust to Protect Your Young Children
You don't need to be rich to benefit from creating a Trust as a part of your estate plan. In fact, creating a Trust may actually be most beneficial to families with young children, regardless of wealth or property ownership. A Revocable Living Trust is one of the most versatile estate planning tools available.
What is a Revocable Living Trust?
A Revocable Living Trust is a trust account that you can set up and fund while you are alive. As the grantor, you can name yourself the trustee, and that allows you to retain all ownership control over your assets throughout your lifetime. When you die, control and administration of the Trust will pass to the successor trustee. This successor trustee will be responsible for administering the Trust in accordance with your instructions. These instructions include determining who will be the beneficiaries of your Trust, how and when they will receive distributions of assets, and how assets that remain in the Trust should be managed.
What Makes a Revocable Living Trust So Good for Parents with Young Children?
1) Avoid Going to Court
For anyone creating a Trust, this is generally the number one reason people choose creating Trusts as a method of estate planning. When you die, any assets that you have accumulated throughout your lifetime become part of your estate. Your estate, in accordance with your Will, is distributed to your heirs. However, before any assets are distributed or transferred, your estate has to go through the probate process. This means that your Will goes on public record and your loved ones will have to go to court, where the court will determine whether the Will is valid and authentic. This probate process can be costly and takes months to complete.
With minor children, the probate process can be a nightmare. Your children will need funds and support to be made available to their guardian immediately. This is where a fully-funded Trust can truly shine. Funds and property that are placed into a Trust can be transferred to your heirs immediately and without the cost of going to court. Leave the financial distributions to your chosen successor trustee rather than a probate court.
2) Adapt with Changing Circumstances
A Revocable Living Trust is, as the name suggests, revocable. This means that, while you are alive, you can make changes to the trust document and add or remove property as you see fit. You can even dissolve the Trust if that makes sense for your situation. A Revocable Living Trust gives you the opportunity to create a Trust now and make changes throughout your lifetime as your children grow and their needs evolve. Once you die, the Trust automatically becomes irrevocable, which means that no more changes can be made to the trust document.
3) Get Organized
This is a great hidden benefit of creating a Trust, especially for young families. Meeting with an attorney to determine which assets to include in a Trust is a chance to go through old files and desk drawers to locate all important account statements, titles, deeds, etc. This is also the time to replace lost documents, update beneficiary designations, and ensure that all titles and deeds are clear and ready to become a part of your estate. An attorney can help you get organized and create a system to protect and provide for your loved ones, no matter what.
4) Avoid Guardianship or Conservatorship
If you become incapacitated and are no longer able to take care of your financial affairs, your Revocable Living Trust can provide for how you want your assets managed and your loved ones cared for. Under the instructions of a Trust, control of your estate can transfer to your successor trustee pretty much right away, allowing the successor trustee to begin providing support and funds to your minor children. Without these provisions, your loved ones would need to go through a court process to certify your incapacity and have a guardian or conservator appointed to act on your behalf.
5) Prevent a Windfall Inheritance for Young Children
Minors cannot inherit property or assets until they reach the age of majority. A Trust is a great way to ensure that your minor beneficiaries are cared for before they reach the age of 18. But it will also prevent a challenging situation from occurring when your children turn 18. Without a Trust, any assets left to your children will become available to them on the day they turn 18. This means, if you leave your estate to be split evenly among your children, each child could expect a windfall when they are still quite young. A Trust, on the other hand, allows you to specify when, in what amounts, and for what purpose assets are distributed to your children, no matter their age. Using a Trust, you can provide for a child's care and education, and then distribute the remainder of the estate over time or delay distribution until the children are older.
Contact the Tyra Law Firm to Create a Parenting Trust Plan
If you are the parent of a minor child and you have not yet created an estate plan, what are you waiting for? We know that estate planning (especially creating Trusts) can be daunting, but we have news for you: estate planning really isn't that hard and doesn't take too long. At The Tyra Law Firm, we prioritize convenience, efficiency, and compassion to ensure that the families we meet receive effective estate planning tools customized to meet their unique needs. Give us a call for a free phone consultation! Our number is (301) 315-0811.