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DAL Law Firm:Setting Up a Trust for Minor Children: Protecting Their Financial Future

Introduction

As a parent, you want to ensure your children are cared for and financially secure, even if you are no longer around to provide for them. Setting up a trust for minor children is a powerful tool in estate planning that can help you achieve this goal. A trust allows you to manage and distribute your assets in a way that protects your children’s financial future, ensuring their needs are met while minimizing potential risks.

What Is a Trust?

A trust is a legal arrangement in which you (the grantor) transfer assets to a trustee, who manages those assets on behalf of your beneficiaries—in this case, your minor children. The trustee is responsible for following the instructions you outline in the trust document, ensuring the funds are used for your children’s benefit.

Why Set Up a Trust for Minor Children?

  • Avoid Direct Asset Transfers to Minors: Minors cannot legally own or manage substantial assets. A trust ensures that funds are managed by a trusted adult until your children reach an appropriate age.
  • Control Over Distribution: A trust allows you to specify how and when your children receive the funds, such as for education, healthcare, or other important milestones.
  • Protect Against Mismanagement: By choosing a responsible trustee, you reduce the risk of financial mismanagement, ensuring that the assets are used as intended.
  • Minimize Taxes and Legal Costs: A properly structured trust can help reduce tax burdens and avoid the delays and expenses of probate.

Types of Trusts for Minor Children

Revocable Living Trust:

  • Allows you to retain control over your assets during your lifetime.
  • Provides clear instructions for managing and distributing assets after your passing.
  • Created through your will and activated after your passing.
  • Suitable for ensuring your assets are distributed according to your wishes.

Testamentary Trust

  • Created through your will and activated after your passing.
  • Suitable for ensuring your assets are distributed according to your wishes.

Choosing a Trustee

Selecting the right trustee is a critical decision. This person or institution will manage the trust and make decisions in your children’s best interests. Look for someone who is responsible, trustworthy, and financially savvy. Consider naming an alternate trustee as a backup.

How to Set Up a Trust

  1. Define Your Goals: Determine what you want the trust to accomplish, such as funding education, providing for living expenses, or preserving assets for the future.
  2. Choose the Type of Trust: Work with an estate planning attorney to select the trust that best suits your needs.
  3. Draft the Trust Document: Specify the terms of the trust, including instructions for asset distribution, trustee responsibilities, and the timeline for your children to access the funds.
  4. Fund the Trust: Transfer assets into the trust to ensure it can fulfill its purpose.

Conclusion

A trust is an invaluable tool for protecting your children’s financial future and ensuring your wishes are honored. 

If you would like to consult with our office regarding our services, we would be happy to assist you! Our telephone number is (206) 408-8158.

You can also learn more about our services by visiting our website:

https://www.dallawfirm.com

Or visit our YouTube channel here: https://www.youtube.com/@dallawfirm.

Contact us:

19803 1st Avenue S.
Suite 200
Normandy Park, WA 98148

T (206) 408-8158
F (206) 374-2810

 

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