Learning that you are expecting a child whether through childbirth, adoption, or surrogacy, can be extremely exciting but overwhelming. There are so many decisions to make before your child’s arrival. But while you may be thinking about names, birth plans, and nursery color schemes, you may also want to give significant thought to updating (or creating) your estate plan.
There are numerous reasons as to why it’s important to create and/or update your estate plan. One really important legal document to consider as part of your estate plan is a trust. Here is what new parents should consider about trusts.
Isn’t a Will a Better Choice?
When most people think about establishing a comprehensive estate plan to leave assets to their children, they think of a last will and testament, commonly known as a will. However, a will isn’t always the greatest option for distributing your belongings – just the simplest.
Trusts provide parents with greater control concerning how and when your child will receive his or her inheritance. When you establish a trust, you are able to provide extremely detailed instructions as to the contents of the trust and how it is to be distributed.
Benefits of a Trust
The grantor, who is responsible for drafting and completing a trust, is you. You also decide on a trustee, the individual who is responsible for the trust after you have passed away.
Living vs. Testamentary Trusts
However, living trusts are effective immediately as opposed to testamentary trusts, which are effective after you die. One of the best aspects of a trust is that you can place property into it in order to separate it from your estate so that you don’t might have to pay taxes on it.
Unlike a will, a trust allows you to direct a trustee to provide your child with a portion of their trust every year, every so many years, or at a specific age. Your child does not have to inherit everything at once when they turn 18, although you could choose to do so.
You can also create a conditional trust for your child. A conditional trust is one in which something must occur in order for them to receive the trust. For instance, a parent can create a conditional trust for them to receive upon graduating from college. In other words, the child would only be able to receive the contents of the trust after graduating college – not at a specific age or date, but rather the occurrence of an event. Similarly, you could create a conditional trust in which your child must save up a specified amount of money before they are entitled to the trust.
It’s important to note that your trustee has a fiduciary duty to act in your interests and the interests of the trust’s beneficiary.
Biddle Law Can Help
When you work so hard for all of your assets and want them to go to specific people and causes in a certain manner, you deserve to be able to do so. However, without a properly structured estate plan, including a correctly constructed trust, you can actually create detrimental circumstances for your loved ones, rather than help them. This is why it’s so important to consult with a knowledgeable and experienced California estate-planning attorney who knows the current laws and has experience creating different types of trusts and comprehensive estate plans.
At Biddle Law, we are here to answer all of your questions and walk you through the estate planning process. We care about your future and want to assist in protecting your interests. To learn more or to schedule a consultation, contact us today!