Almost all parents want the very best for their children, financially as well as physically and emotionally. In an effort to protect their kids and make sure they have the necessary funds if the need arises, many of our clients ask us for help creating trusts for their child’s future benefit. The experienced trust attorneys of Surprenant & Beneski, P.C. have successfully established trust funds for the children of our clients throughout Southeastern Massachusetts for over 15 years.
During that time, we have had a chance to see mistakes in trusts created by previous professionals, some of them innocuous, but some of them downright dangerous. If the trust is not worded correctly, it may result in more problems than it resolves. Knowing that you don’t want to do anything to jeopardize your child’s future, we have compiled a list of pitfalls that are important to avoid when you are creating a trust for your child:
- Forgetting to Change the Name of the Beneficiary on Your Life Insurance
Once your child’s trust has been created, it is necessary to change the name of your life insurance beneficiary from your child’s name to the name of the trust. Without making this seemingly small change, you will at least partially defeat the purpose of the trust you have created.
- Making the Trust Funds Accessible Too Early
Though the government often recognizes age 18 as the age of maturity, we have learned that brains do not fully mature until the age of 25. This means you may want to reconsider the age at which you want your child to have full control over the trust money.
Because this is entirely in your hands when you set up the trust, you may also want to restrict the purposes the funds can be used for. For example, you may want to designate that the trust funds be used only to pay for education, medical bills, a wedding, or a first home.
- Selecting an Inappropriate Trustee
At Surprenant & Beneski, we have seen too many clients choose trustees for sentimental reasons rather than practical ones. It is important to remember that whomever you choose for this significant role in your child’s life has to be not only financially astute and completely trustworthy, but also able to hold firm to the restrictions you have imposed.
In some cases, it is best to name a financial institution, such as a bank, as the trustee, to make sure that objectivity is a strong part of the equation.
- Forgetting to Plan for Your Child’s Higher Education
Many people don’t realize that the trust funds will have to be listed as assets when your child applies for college. If the trust is too well-funded, your student may be ineligible for financial aid or even for scholarships, grants, or loans. Surely you don’t want to hamstring your child’s attempts to put together enough money for college. This is another reason it is crucial to work with a knowledgeable trust attorney when planning for your child’s future.
- Not Keeping Current/ Not Making Changes When Necessary
We all know that our personal world, as well as the world outside us, is constantly changing, so it’s realistic to assume that your child’s trust fund will need tweaking or even an occasional overhaul. At least annually, you should give the trust your attention and make sure to adjust it to match recent achievements, illnesses, injuries, or altered relationships.
Contact Our Highly Capable Trust Attorneys Today
Trusts for your children can have a number of purposes, including:
- Potentially reducing estate and gift taxes
- Avoiding probate
- Providing protection for children with special needs
- Protecting assets intended for your child from lawsuits or creditors
Don’t let your good intentions be overridden by unnoticed mistakes in estate planning. At Surprenant & Beneski, there is always a savvy trust attorney at the helm to carefully watch over you, protecting you and your offspring from the consequences of errors in conception or follow-through. Contact our team today.