Income Distribution Trust for Minor Children
Perhaps the most important aspect of creating and planning an estate in life is preparing a trust for your children, especially for those children under the age of 18. As a part of your trust, ensuring that your children receive their inheritance in timely distributions as you intended, is a critical aspect of planning.
By planning a separate trust for your children’s inheritance, you can choose when and how they will receive the money. Perhaps you don’t want them to get any of their inheritance until they are 24, or perhaps you want them to have a monthly amount given to them in the event of your untimely passing until they are 30, and receive the rest upon their 35th birthday. You set the rules. Setting up an inheritance trust for your kids will allow you to make the rules. This is important because if your children’s inheritance is lumped in with the rest of the estate, they are not guaranteed to get what you may have intended for them.
Many Separate Trusts
You can discuss the various possible provisions of an inheritance trust with your estate planner. Once you have made final decisions about a special trust for your children, ensure that your named trustee is aware of your wishes. Most planners create a "Statement of Wishes" that contains plain language and specifies intent and alternatives. This person will be responsible for executing your wishes in your absence.
Grants and Loans
Be aware that the language and provisions of the trust need to be specific and flexible enough to allow education grants, loans, and programs for students. You also need to clarify whether trade schools or alternative "schools" are allowed.
Build in flexibility
Consider staggering the distribution, with some monies given at 25, 30 and so on, which allows children to mature into their money.
Some people build incentives into trusts so that children are encouraged to finish college, start a business or run a charitable enterprise.
Take advantage of the recession
If you have real estate holdings that are currently artificially low, consider gifting those now instead of later, when the tax laws may be different.
Too Much or Too Little
Warren Buffett’s advice. Buffett, whose children each received $1 billion to do nonprofit work but only $90,000 in stock for personal use, said he believes you should give children “enough to do anything, but not enough to do nothing.”
Trust Provisions and Limits
If you need to provision very specific ways that the trust be used or not used, fine tune the verbiage of the trust. Whether it is used to pay for a medical degree or a new house is all up to you. Make sure your estate planner knows exactly what your wishes are.