Most parents spend a lifetime worrying about, planning and strategizing ways to care for their children and enhance those children's well-being to the maximum extent possible. One way you can enhance your ability to provide for your children is through estate planning. With a thorough and well-designed estate plan in place, you can serve as a provider for (and protector of) your children, even after you die.
When most people begin thinking about creating an estate plan, they usually start by contemplating how they will distribute their assets after they die. For a lot of people, setting up this system of distribution usually centers around their children. Many distribution schemes involve executing a will that divides up one's assets, in equal fractions, to each of that person's children. For some, people, this is a completely appropriate way to plan for the distribution of their wealth. For others, though, more planning may be in order to ensure that all of their goals and objectives are met.
There are a lot of circumstances where you might want to consider using a different distribution plan other than “to my children, in equal parts, immediately upon my death.” For these special circumstances, utilizing a trust or trusts as part of your planning may provide clear added benefits. One situation where this is true is if one or more of your children have special needs. Many people with special needs receive benefits from needs-based government programs. A large, or perhaps even modest, inheritance may result in the government declaring that your child no longer meets the financial qualifications for these types of programs, which may cut your child off from benefits upon which he/she has come to rely. Trust planning can help avert this disaster. With a properly crafted and executed special needs trust, you can still include your child with special needs in your estate plan distribution, while doing so in a way that will not cause the government to declare your child ineligible to continue receiving his/her benefits.
Another variety of trust planning that can benefit some families is the “spendthrift” trust. Some people who are loosely familiar with spendthrift trusts, or at least the word “spendthrift,” may associate this type of planning with children who have problems in their lives, such as gambling addictions, drug/alcohol abuse problems, creditor issues, maybe a failing marriage with a money-hungry spouse… or just a notoriously terrible ability at managing money. Without a doubt, these situations are ones where a spendthrift trust may be able to help. But the possible circumstances where this type of planning are beneficial are not limited to those scenarios. Many parents may think that it is in their child (or children)'s best interests not to receive a large lump-sum of inheritance at a young age. A parent may desire that, even though their children are responsible and free of issues like addictions, divorces or lawsuits, the children not receive all of their distributions until they've reached milestones like graduating college, turning 25 or 30, or getting married.
In any of the situation outlines above, you can accomplish your goals through trust planning. You can choose the event that will trigger a partial (or final) distribution to each child. You can also give the trust's trustee as much or as little discretion as you desire in terms of making certain decisions, like whether to give a child a portion of his/her distribution in advance of the timetable laid out in the trust. When it comes to spendthrift planning or special needs planning, just like most other types of estate planning, there are a wealth of tools available to your estate planning attorney to make sure your plan does exactly what you want on precisely the timetable you desire.