Inheritance Choices in California: In Trust or Outright?
- Posted on: Dec 10 2022
Many parents wish to leave assets to their children. One common way of doing so is through the creation of a Trust. Another is to do so outright. Doing so outright means that your assets will be distributed to your kids now. Receiving your assets in a Trust means that the assets you wish to leave them will pass to them at a later time. A Trustee will be responsible for managing these assets on their behalf until that time comes.
Money held in a Trust may be distributed in a couple of different ways. Your kids may receive the money all at once, or they may receive portions of it at different times as certain conditions are met. For example, a Trust may state that one-tenth of the assets held within it are to be distributed to someone on every birthday starting with their 18th birthday, or they could receive all of the assets upon graduating college or turning 35. The creator of the Trust is responsible for deciding when they wish for the recipients to receive the assets in the Trust. The job of the Trustee will be to oversee and manage the assets in the Trust, which is why it’s imperative that you select someone whom you can Trust to take on this role.
Pros and Cons of Trusts for Children
Trusts set up for children can be extremely beneficial because you can place money in a Trust and the Trustee can oversee and manage it, and plan distributions based upon needs. Additionally, since Trusts are generally protected from creditors and are not considered marital assets during divorce, they keep assets safe for your loved ones. Since the assets in a given Trust are considered to belong to the Trust, they are not property of the recipient until he or she actually receives them.
One of the bigger issues with setting up Trusts for children is when the Trustee of the Trust is a sibling of a beneficiary. In such a case the Trustee may let his or her own personal issues with their sibling impact the way that they do their job. For instance, if the Trustee sibling has been excluded from the Trust or feels that he or she is not receiving as much as their sibling, they may try to intentionally complicate things.
This is why it’s in your best interest to appoint a professional Trustee to do the job. A professional Trustee can be either a private or corporate Trustee. While they do cost money, they may also save money in the long-run since having a bad Trustee can lead to a lawsuit, hefty court fees, and can take a long time to resolve.
The Law Offices of Brian L. Fox, APLC Help those Who Wish to Pass Down Wealth
When you’ve worked hard for your money, the last thing you want is for those you pass it down to, to either squander it or allow it to negatively impact their personal lives. That’s why it is helpful to consult with a knowledgeable and experienced California Estate Planning Attorney.
At the Law Offices of Brian L. Fox, APLC, we know how important it is to protect that for which you’ve worked so hard. We will help you to create a comprehensive estate plan to protect your wishes. To learn more or to schedule a free consultation, contact us today!
Posted in: Estate Planning