Why should I consider establishing a trust for my minor children?

Without putting the appropriate documents in place, the default for your children is that the courts will name a financial guardian to manage the assets and accounts on behalf of your children while they are minors and then the accounts will be turned over to your children on their 18th birthday.  Outright.  No strings attached.  Does that seem like a good idea to you?  Most parents don’t. 


By establishing a trust for your children, it allows you to leave more detailed instructions.  First, you get to pick who will manage assets on behalf of your children instead of leaving this for a judge to decide.  For example, if you are divorced, do you really want your ex managing the assets?

Second, you can specify the terms on which you want your children to receive things.  So, for example, you can specify that you don’t want your children to have access to the funds until age 21, 25, 30, or older.  While they are under the specified age, the trustee that you named will manage the accounts on the child’s behalf and can spend them for the child’s benefit—such as paying for care and educational expenses.

Third, depending upon the type of trust used, you can protect your children’s assets.  By leaving the assets to your child in an asset protection trust, you can protect your children and their inheritance from lawsuits, creditors, bankruptcy and divorce. 

Fourth, ease and privacy.  A living trust plan will permit your family to avoid the time consuming and expensive probate process and ensure that funds are more readily available for your children’s care.  In addition, probate is matter of public record, meaning that any nosy person can review the court records and see what you owned and who is receiving it.

Finally, a trust-based plan can protect your children if your surviving spouse ever remarries so that your children are not accidentally disinherited.  For example, let’s assume Bob and Susan create an estate plan together that leaves everything to each other and then to their children.  Bob dies, leaving everything to Susan.  A couple of years later, Susan meets John and remarries.  Without thinking about the consequences, Susan and John execute new wills that leave everything to each other and then to their respective children from their prior marriages.  What happens if Susan dies before John?  Everything passes to John and he has no obligation to leave anything to Bob and Susan’s children—in other words, Susan accidentally disinherited her own children.  With the proper trust provisions, Bob and Susan could have avoided this situation and ensured that the children were not disinherited.