The steps you take (or do not take) to create an estate plan can affect your loved ones for generations to come. And establishing a trust for your children can play a significant role in this.
Different trusts for different children
When you are considering trusts for your kids, think about their needs and situation as well as what you hope to accomplish with the trust. For instance:
- If your child has special needs, setting up a special needs trust can be crucial for ensuring your gifts do not compromise any financial assistance they currently qualify for. Without this type of trust, any funds they receive after you pass away could make them ineligible for programs with resource and income restrictions.
- If you worry about your child wasting the funds in a trust, you can direct trustees to release funds upon specific events. Some milestones can include graduating college, getting married or having a child.
- If your child is too young to receive the funds, you can set up a trust that pays out only when a child reaches a certain age.
- A dynasty trust can protect funds for generations, allowing parties to avoid estate taxes and making it easier to pass wealth down.
- Generation-skipping trusts allow individuals to pass assets down to grandchildren instead of children.
Individuals must assess their specific situation and planning expectations to determine whether these or other types of trusts can accomplish their goals.
How do trusts protect your legacy?
When you set up trusts to benefit your children or grandchildren, you can maximize your gift by minimizing tax implications. You can also prevent wasteful spending and shield the assets from legal claims that may arise in the future.
Trusts are about more than giving your kids and grandkids money. They can also ensure your heirs have help managing funds and avoid the complexity of probate. Further, they serve as a means of supporting and providing for your loved ones when you are no longer around.
Considering how beneficial trusts can be for your family now and in the future, they can be a valuable option to explore when you are creating your estate plan. You can discuss these and other planning strategies with the attorneys at The Quinn Law Firm by calling 814-833-2222.