The birth of a first child is the first time many New York residents think about estate planning. One question that parents often have is if setting up a trust is a good idea now that they have the responsibility of caring for a newborn. There was a time when many people mistakenly believed that trusts were a financial tool that only benefited wealthy families. However, more families with children now understand how trusts can help them protect their children’s future.
Problems associated with child inheritance
Minor children are not permitted to become legal owners of assets that are left to them by a deceased parent. Things can grow a bit complicated when parents fail to leave legally recognized instructions for these assets. In many cases, it becomes necessary for a judge to step in and appoint an asset manager. Another estate law concern for parents involves teenagers old enough to legally take possession of their inheritance without the maturity to handle the accompanying responsibility.
Benefits of a trust
Trusts represent a crucial part of the estate planning process and allow parents to control the inheritance of their children even when they can no longer be with them. A trust allows the parent to designate which asset belongs to which child as well as identify the person they want to manage assets for a child. Parents can also use a trust to deliver instructions regarding the use of assets while their children are still minors.
Savvy parents might use a trust to set forth requirements for children to meet before they are allowed to take full possession of their inheritance. Examples of these requirements include reaching a certain age or graduating from college.
It is only natural for individuals to have concerns for the future of their loved ones after they can no longer take care of them in a physical sense. In addition, there is an added sense of urgency with estate planning when minor children are involved. Individuals with questions regarding any stage of the estate planning process may benefit from a consultation with an attorney.