WHO WILL MANAGE AND PROTECT MY CHILDREN'S INHERITANCE AFTER I PASS AWAY?

Children may not be ready to handle their inheritance for a number of reasons: age, disability, experience, etc. In these cases, a trust can help by protecting the assets and providing a third person to help the beneficiary invest and make spending decisions. A Trust. Any young child who inherits a share of an estate must have that property held by a responsible adult. This ensures that the money is invested properly and spent on education and significant needs. This kind of trust generally continues until after age 25, to ensure that the funds are applied to tuition and other education expenses through the college years. The Trustee. This is the person who holds a child's inheritance, invests the money and makes spending decisions. This is the person who the children call when they need to pay college tuition or want a new car. If the children are minors, the Guardian can call the Trustee and ask for money to pay for special things. Adult Children can have access to the inheritance if the Trustee believes that it is a reasonable and appropriate expense (i.e. down payment for a new house, paying for a wedding, etc.)

The person serving as Trustee should understand financial issues. You should be able to see that person working with your children on spending decisions in the same way that you would. A Trustee should also be the kind of person who will take investment advice from a financial advisor and work well with an accountant and attorney to address other issues.

The Trustee will have this job for some time. The trust document will usually tell the Trustee to distribute the money in the trust to the child when the child reaches a certain age. That means that the Trustee is often a part of the child's life until they reach age 25, 30 or older in some cases. Because this term can be so long, it often makes sense to name an alternate Trustee who can take over if something unexpected happens and your first choice cannot do the job.

Depending upon the amount of the inheritance involved, the child's characteristics, marital status and other factors, it is often wise to extend the trust beyond age 25. Inheriting a large sum of money is a unique experience. Using a trust to delay the impact on the beneficiary or to deliver the inheritance in stages can give the beneficiary an opportunity to adjust and develop the experience and skills necessary to handle the new responsibility and demands involved.

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