Setting up a trust fund is an excellent way to pass your assets to your grandchildren and provide for them. With the assistance of a trusted lawyer, you can write a trust that expresses to whom the funds will go and when the income will be made available. Here’s a simple guide on how to get started on establishing a trust.  

What Are Grandchildren’s Trusts?

In many ways, grandchildren’s trusts are similar to children’s trusts. They both aim to bestow funds for a particular purpose, like education. However, a distinctive feature of grandchildren’s trusts is that they lower the estate tax of a grantor. That's because they will be subject to the generation-skipping transfer (GST) tax. In other words, you also benefit from this kind of trust.

Why Are They Advantageous for Grantors?

Having a trust for someone gives you control over when the money will be turned over to them. You also decide what the trustee will use the money for and how they should spend it. Trust funds for grandchildren are especially favorable for minors because you will be able to manage the money you left for them even after you pass away. Additionally, you can reduce your estate’s size by transferring funds into the trust without worrying about gift taxes. You will also be exempt from paying taxes that come with income produced by the trust after making deposits.

Keep in mind that trusts have complicated legal aspects, so you should seek counsel from a lawyer before setting one up. Your actions may have unforeseen consequences. As such, having an attorney on your side will help you decide which arrangement will be best.

How Do You Set Up a Trust for Your Grandchildren?

Minor grandchildren need to have a trustee that oversees the assets or funds for them. If you wish for the funds to go towards medical and living expenses, for example, the trustee will make sure the money will be directed there.

It is also possible for you to leave the distribution of the funds to the discretion of your trustee. Your lawyer will advise you to choose an alternate trustee who will adequately assess the maturity and needs of your grandchildren. This way, your wishes are followed accurately.

If you’re concerned about estate planning and how to grant money to your grandchildren, don’t hesitate to talk to a knowledgeable lawyer. The professionals at Rutherford Law Office offer the guidance you need when setting up a trust fund. They also provide legal services in the areas of family law, divorce law, and child custody. Call them today at (740) 775-7434 to know more about their services or visit their website for more information.