There’s no doubt that having kids can be financially taxing. However, it’s important to note that not all children cost you the same amount of money. When you have multiple children, you likely want to ensure that your kids feel as though they are treated fairly and equally. For that reason, you may be thinking about splitting your property to be divided equally among them. But as mentioned, different children have different financial needs at different points in time. Therefore, what may be fair does not always mean it will be equal. One option is to place your assets in common trust, sometimes referred to as a pot trust, and provide instructions for the trustee to follow concerning how you want the money to be spent.
Why Would Someone Choose a Common Trust?
A really important consideration when creating a comprehensive estate plan is to take into consideration what would happen if you should pass away while your children are still minors. A common trust helps by setting up your assets to be provided to your children in much the same way that you do so now. In the instructions you provide for the trustee, you will want to prepare a detailed outline demonstrating what you would spend money on and for which needs of your children. While younger children may require money to pay for things like school, it may make more sense to split your assets equally among your older children.
How a Common Trust Works
When you establish a common trust, you will list your children as the beneficiaries and name a trustee whom you wish to oversee and manage the trust for your children. Who you select is important as they will be the ones to follow your directions in the trust agreement. Once your youngest child reaches an age that is specified in the trust documents, any remaining property is then divided into equal shares for your children.
Rather than waiting for all of the children involved to come of age, you can establish instructions for the trustee that provide your older children with an advancement for certain expenses, such as buying a house. It’s important to note that you don’t have to provide a specific age at which the trust will terminate; it could also be an event, such as once the child is married or graduates from college. Since different milestones may occur at different paces, it may be helpful to provide an event and an age, specifying whichever comes first. This is especially helpful if your oldest and youngest children have a big gap in age. That way, the oldest doesn’t have to wait for the youngest to come of age.
One of the biggest reasons to establish a common trust is that it is extremely flexible. You are essentially allowing for the trustee to step into your shoes and spend on your children in a manner that you would if you were still alive.
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, 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 dealing with such situations.
At Biddle Law, we are here to answer all of your questions and walk you through the estate planning and probate process. We care about your assets and your loved ones and want to help in any way we can. To learn more or to schedule a consultation, contact us today!