Many individuals ask me how they should plan for a distribution to their children out of their trust after they’ve passed. Many people have different approaches to this, some wanting to be hands-off and leave it in the trustee hands and others who really want to enumerate how that child can access those funds. This is really the essential benefit of working with an estate planning attorney, is having the conversation based on your children, your estate, and also your particular parenting style. A lot of times people will say, “I’m dead; I’m going to let it be, and you know, let the chips fall where they may,” but to the extent, your child is not ready emotionally and may not be mature enough to handle that money. We want to make sure that money is protected and we’re not just protecting it from that child, but from others who might swarm around them at a time of inheriting and pressure them to do certain things with those funds.
These are the considerations we really need to have a dialogue about and determine how best to make a plan. Sometimes it’s not always the same plan for all children. We might have a very different trust distribution for one child versus another. We also need to focus on whether or not there are asset protection concerns for a child. This is something that is really not afforded to those who are creating a revocable trust. It’s essentially going to be treated as holding title in their own name but when someone passes, their trust becomes irrevocable. What that means is that the beneficiaries of that trust are not going to necessarily have creditors be able to access those funds unless those funds have been distributed.
So all of these should be a part of your conversation with an estate planning attorney to really figure out what’s suited for your family and for your family personalities that exist today, tomorrow, and even 10 years down the road.