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Trusts
Trusts can be very beneficial and useful for a family with children or young adults who don’t have the years, experience or maturity to handle the amount of dollars that would flow to that child in the case of a death. A trust can avoid the necessity and significant expense of a guardianship if the parents should both pass away before a child is 18 years old. Trusts can be used to handle funds and insure those funds are properly managed and paid to the child or young adult at times that the funds won’t overwhelm the child and result in those funds being lost or frittered away.
Whitmore Law Office discusses the amount of funds that would be available for children if both parents died and how and in what amounts those funds should be made available to the young adults. We often suggest that after age 22, a child receive income from their trust share and that distributions of principal are paid out at various ages, depending on the amount of principal, again to not overwhelm the young adult and to best help him or her manage those funds. We always suggest the Trustee be able to make advancements to the child for medical reasons, college expenses and other good reasons as determined by the Trustee.
Depending on the amount of money involved, the Trustee can be a bank or a family member with good skills in the financial area. Good planning in this area can assist your young adult in being financially responsible and in protecting the assets you have left them.
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Next: Pre-Death Planning
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