Inheritance is a special gift that you want to protect for your children, and protecting it is of significant concern for many parents. Establishing trusts and guardianship arrangements can help ensure that your assets are managed and distributed according to your wishes in the event of your passing. This article will provide an overview of trusts and guardianship to help you understand their importance and how they work.
Trusts:
A trust is a type of legal arrangement or account that can essentially “hold” or “own” assets. For a trust, you can designate a third party or “trustee” that would be in charge of the trust and oversee its distributions on behalf of the beneficiaries. Trust accounts do not have a monetary minimum contrary to some popular belief, so even if your children’s inheritance leans on the smaller side, you can still utilize a trust. Here are some advantages of a trust:
- Control: You can specify the terms of the trust, including when and how your children will receive their inheritance. This control is particularly helpful if your children are minors or young adults who may not be ready to handle significant assets on their own.
- Avoiding Probate: Trusts generally bypass the probate process, which can be time-consuming and expensive. This means your assets can be distributed to your children more efficiently and privately.
- Asset Protection: Trusts can protect the assets from potential creditors and lawsuits that might arise in the future
Guardianship:
Choosing and assigning guardianship can be a little nerve wracking and for a parent, it’s hard to imagine your children being raised without you. However, it’s important to ensure that your children are taken care of physically, emotionally, and financially in the unlikely event of your passing. A guardian is responsible for all of that care of your minor children, so it’s crucial to choose someone who would be able to do so until your children are of age. Many people consider their siblings, aunts & uncles, and reliable close friends. Other things to consider about a guardian are:
- Where does the potential guardian live? Would it require the child/ren to relocate?
- How involved in your children’s lives would the guardian be prior to your passing?
- Can the guardian provide for multiple children if you have more than one minor child?
- Does the potential guardian have a good support system? It takes a village!
- Does the potential guardian share the same or similar parenting or religious beliefs that you would want your kids to be raised with?
What to Take Away:
To protect your children’s inheritance effectively, consider the following steps:
- Establish a Trust: Consult with Windrose Law Center to set up a trust that aligns with your goals and provides the necessary provisions for managing and distributing your assets to your children.
- Choose the Right Guardian: Select a guardian who is willing and capable of raising your children with love, care, and in alignment with your values.
- Communicate Your Intentions: Discuss your plans with the chosen guardian and other family members to ensure everyone is aware of your wishes.
- Review and Update Regularly: Life changes, such as births, deaths, or changes in financial situations, may necessitate updates to your estate plan. Review it regularly to keep it current.
Remember that estate planning is a personal process, and what works best for one family may not be suitable for another. Tailor your arrangements to your specific needs and consult professionals to ensure everything is set up correctly.