3 Reasons to Create a Trust Fund for Your Children
Many people think that trust funds are only for the wealthy. However, these legal financial plans can do more than pass money from one person to another. You should create a trust to ensure your assets care for your children according to your wishes. Here are three other reasons why you should opt for this type of financial planning.
3 Benefits of Trust Funds for Children
1. Guarantees Funds
If you make an irrevocable trust fund for your child, you can rest assured that other third parties won’t obtain the money. For example, creditors can’t seek claim to these assets if you opt to file bankruptcy later in life. Keep in mind that assets can still be seized if they’re placed in a revocable living trust, which is an account you can change while you’re alive.
2. Controls Disbursement
Many parents worry that their children won’t have the financial experience to manage their inheritance responsibly. Fortunately, trusts establish when your child will receive money and how much they’ll get. You can set aside specific amounts for after graduation, marriage, or having a child. You can also prevent misspending by specifying what the funds can be used for.
3. Prevents Probate
During probate, the court will review your assets and designate an inheritor. This process can be lengthy, potentially requiring your child to hire an attorney and subjecting them to estate taxes. Trust funds can be used to help your child avoid these challenges. Upon your passing, the funds in a trust will be distributed according to your wishes, and your child won’t have to pay taxes on their received assets.
When it comes to estate planning, trusts are just one possible way to manage and direct your assets. If you’re curious about all of the options, contact the experienced attorneys at Wills and Trusts Hawaii in Honolulu. This firm specializes in estate law, and their legal team will review your assets; then discuss how wills, trusts, and other strategies will best fit your wishes. To schedule a free consultation, contact them online or call (808) 792-8777.
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