Creating a Children’s Trust in your Estate Plan

A children’s subtrust is a type of trust that is specifically designed to hold assets and manage them for the benefit of minor children. It is commonly used as part of a larger estate plan to ensure that assets are protected and properly managed until the children reach a certain age or milestone.

Here are a few key points to consider about a children’s subtrust:

1. Purpose: The main purpose of a children’s subtrust is to outline how assets will be managed, invested, and distributed on behalf of the minor children. The trust can be structured to provide for the children’s immediate needs, such as education and healthcare expenses, while also preserving and growing the assets for their future.

2. Trustees: A children’s subtrust will typically have one or more trustees appointed to manage the trust assets. The trustee(s) are responsible for making investment decisions, managing the trust’s finances, and ensuring that the trust’s provisions are followed. They must act in the best interests of the children as beneficiaries of the trust.

3. Age or milestone: The subtrust may specify a specific age at which the children will receive their inheritance outright or provide for distributions at different milestones, such as graduating from college, getting married, or reaching a certain level of financial responsibility. The terms and conditions of the distributions can be customized based on the needs and goals of the grantor (the person creating the trust).

4. Successor trustees: It’s important to appoint successor trustees in case the original trustee(s) are unable or unwilling to carry out their duties. This ensures continuity in managing the trust and securing the children’s best interests. The successor trustees can be family members, friends, or professionals, depending on the grantor’s preferences and circumstances.

5. Trust duration: A children’s subtrust may continue for a specific period or until the children reach a certain age. The trust can be structured to terminate once the beneficiaries become adults or continue to exist if additional funds or assets are held in the trust for future generations.

6. Tax considerations: When establishing a children’s subtrust, it’s essential to consult with an experienced estate planning attorney to understand any potential tax implications. Trusts have unique tax rules and thresholds, and proper planning can help minimize potential tax burdens.

The information provided here is only a general overview. Creating a children’s subtrust requires professional advice tailored to your specific circumstances. Consulting with a qualified estate planning attorney will help ensure that your intentions and goals are properly incorporated into the trust.