Trusts that hold family assets on behalf of minors, detailing how and when they are distributed, are, of course a sound practice. Estate planning advisors remind us that this same practice can be helpful for adult children too. After all, financial savvy and smart choice making don’t automatically come with age.
Asset Management For The Long Haul?
Trusts can be established in support of many different goals. For example, trusts enable us to plan ahead for our own potential needs as we age, disburse payments over time to designated beneficiaries, including minors and those with special needs, and even ensure assets get to beneficiaries more quickly, and with greater confidentiality, than the probate process generally enables. As estate planning experts observe, trusts might be an important consideration for adult children too, especially when the goal is to ensure assets are available over an extended period. Forbes shares this guidance:
Make an honest assessment of the ability of each of your children to manage the property, and then decide whether to leave the bequest outright or in trust. Some people are spendthrifts no matter what their age. When you’re concerned an adult child won’t focus on the long term, consider a trust. You can set rules for distributions from the trust. For example, you can limit annual distributions to only investment income or a percentage of the trust’s value. At the other extreme, you can consider giving the trustee discretion to determine the distributions based on the needs and best interests of the beneficiary. When you’re really concerned about the spending of the child, the trustee can pay the expenses of the child directly to providers of essential living expenses instead of distributing cash or property to the child. The rules for distributions generally are limited only by the imaginations of you and your estate planner…
Trustees and Trustee Bonds?
Among the important considerations when creating a trust is the designation of a trustee to administer the assets in accordance with the plans specified in the trust agreement. It is possible to name oneself as a trustee, along with a successor trustee. It is common, though not a rule, for families to designate a loved one or friend to serve as trustee. An independent fiduciary is also an option. Keep in mind that the trustee role is not a ceremonial one. Trustees are fiduciaries: they are legally bound to the highest duty of care in executing their responsibilities. In fact, given the significant duties undertaken by trustees, the trust agreement may require procurement of a trustee bond.
A trustee bond is a type of fiduciary bond that protects the interests of the trust and beneficiaries by guaranteeing the faithful performance of a trustee in accordance with the law. As a leading national provider of many types of fiduciary bonds, Colonial Surety makes it easy and efficient to obtain a trustee bond. Just get a quote online, fill out the information, and enter a payment method. The bond can be printed or e-filed from anywhere. Trustee Bonds Here
Unhealthy Habits? Debt? Lawsuits
Substance abuse and other addictive behaviors, like gambling, provide compelling reasons for placing funds in a trust. Doing so can protect both family members and assets. As retirement planning expert, Bob Carlson points out: “The trust also can have a sort of on/off switch. You might be worried that an adult child has a problem with substance abuse or gambling. In that case, you can give the trustee the discretion to stop making distributions when it is in the beneficiary’s best interests. Distributions can be resumed when the trustee determines it is again in the beneficiary’s best interests.”
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