Trusts allow families to set aside and protect assets for distribution to designated beneficiaries over time. Though trusts can be established for particular uses, like education, healthcare, or charitable giving, they can also be set up based simply on age. In fact, establishing an age based trust is a great way to ensure the availability of funds for life’s key moments.
Age Based Trusts Exemplified
Once viewed mostly as an estate planning tool for the wealthy, trusts are now increasingly in use by more families focused on setting up the next generation for success. For example, educational trusts can be set up to help pay for college and special needs trusts ensure money is set aside and managed for individuals facing particular challenges. While these types of trusts are useful, Cassady Law Offices remind us we “don’t necessarily have to latch onto a specific use when deciding how a trust should be set up,” and point out that a trust can simply specify the age or ages at which the named beneficiary receives assets:
This will often be done when an heir is either a minor or simply young enough that the person creating the trust is concerned about leaving them their entire inheritance at once. An 18-year-old college student can technically inherit $1 million, for example, but their parents may not necessarily want to give them that type of financial gift at that age.…They will set the trust up to distribute portions of the inheritance at different deadlines. Maybe the heir will get 10% of it right away, then…another 40% when they turn 25 years old and they will get the final 50% when they turn 40 years old. This is just an example….But you can see how delaying the distribution of the money can help your heir use it for valuable issues at each stage in life — like buying a house for their family.
When working with an attorney to establish a trust, it’s a good idea to ask for guidance about selecting a fiduciary who has the capacity to perform the essential duties required of trustees. Estate law practitioners remind us that assets placed in a trust do not go through the probate process, “which means this person will have no court oversight in how they do their duties as trustee—choose wisely!” Before appointing a trustee, incorporate as much detail as possible about the purpose and terms of the trust into the trust agreement. Then consider the qualities, skills and time commitments a trustee will need to successfully administer it.
Good to Do: Trustee Bonds
Ultimately, whether a professional, friend, or relation is selected, the trustee has a fiduciary obligation to the beneficiaries—and must always exercise reasonable care and skill in managing the assets of the trust. Accordingly, the trust agreement may require a trustee bond, which is a specific type of fiduciary bond that protects the interests of the trust and its beneficiaries in accordance with applicable state law. Essentially, trustee bonds guarantee the faithful performance of the trustee. As a leading national provider of all 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. Print or e-file the bond from anywhere—even the law office.
Trust Basics Explained
If the idea of establishing a trust is new for your family, you’ll find this overview from
Frank & Kraft helpful:
A trust is a legal relationship where property is held by one party for the benefit of another party. The person who creates a trust is referred to as the “Settlor,” “Trustor” or “Grantor.” The Settlor transfers property to a Trustee, appointed by the Settlor. The Trustee holds that property for the trust’s beneficiaries as well as invests trust assets and administers the trust terms according to the terms created by the Settlor.
Generally, trusts are categorized as revocable and irrevocable, which are explained right here. Regardless of the type of trust, Frank & Kraft remind us that the main objective of a trustee is the management and distribution of the assets in the trust, in accordance with the terms established by the settlor, and point out: “Make sure you appoint someone who will honor your wishes…even if they don’t agree.”
- Speed: Just select the fiduciary or court bond needed from our online portfolio, fill in the info and send it to your client for payment. Then, download, e-file or print the bond.
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