From the moment you first learned you were going to be a parent you likely worried about protecting and providing for your child. That need to protect and provide is evident in your estate plan because you want to be sure your child is financially secure if something happens to you while he/she is still young. Simply leaving an inheritance behind for your child isn’t enough though. As the Indianapolis trust attorneys at Frank & Kraft explain, you must decide who you want to guard that inheritance for your child as well.
Using a Trust to Pass Down an Inheritance to Your Child
Most people rely on a Last Will and Testament to pass down their estate assets when they create an initial estate plan. While a Will can be used to distribute your entire estate, there are several reasons why you may not want to rely solely on your Will to pass down an inheritance intended for your minor child. The most important reason that parents with minor children don’t want to use a Will to pass down a minor child’s inheritance is that a minor cannot legally inherit directly from the estate of a parent. Consequently, if you do gift assets to your minor child in your Will, an adult must manage those assets until the child reaches adulthood. Under that scenario, a court will likely be charged with choosing who that adult will be and you lose out on the opportunity to provide directions and/or instructions regarding how you want those assets to be managed and eventually distributed. Using a trust to protect your child’s inheritance is often a better choice for the parent of a minor child.
Who Should Be the Trustee?
The primary job of a Trustee is to manage the trust assets and distribute those assets according to the terms created by the Settlor. For the parent of a minor child who plans to use a trust to guard the inheritance of that child, some important considerations when choosing a Trustee include:
- Willingness to serve – while there are numerous qualities that may make someone a good Trustee, none of those really matter if the individual is unwilling or unable to serve. All too often, people often fail to sit down with a prospective Trustee and ask if he/she is willing to serve in the position. There are several legitimate reasons why someone might not feel comfortable serving, including the possibility that they might be grieving your loss and emotionally unable to handle the job.
- Experience/skills – it is tempting to just appoint a spouse or family member; however, your Trustee will need to understand the applicable laws and financial concepts necessary to successfully administer the trust. If your spouse/family member lacks these skills, you may wish to consider appointing a professional Trustee.
- Willingness to honor your wishes – legally, a Trustee is required to abide by the trust terms as written by the Settlor. A Trustee must also have some discretion though. Make sure you appoint someone who will honor your wishes and further the trust purpose as stated by you, even if they don’t agree.
- Absence of conflicts – try to appoint someone who is not likely to have a conflict of interest with the trust beneficiaries. This is another reason why a professional Trustee is often the best option.
Contact Indianapolis Trust Attorneys
For more information, please join us for an upcoming FREE seminar. If you have additional questions or concerns regarding your estate plan, contact the experienced Indianapolis trust attorneys at Frank & Kraft by calling (317) 684-1100 to schedule an appointment.