Should I Put Money in a Trust For My Children?

When you’re thinking about your children’s future, the idea of leaving them money probably comes with a mix of love and concern. You want to provide for them, but you also want to make sure that what you leave behind is handled wisely. That’s where a trust can be a helpful tool. It gives you a way to pass on your hard-earned assets while setting some reasonable limits on how and when they’re used.

Why Parents Consider a Trust

Many parents come to us wondering whether a trust makes sense for their family—and more often than not, the answer is yes. A trust allows you to put money aside for your children and decide how that money is managed. Unlike a simple will, which passes property outright, a trust can stretch your support over time and offer more protection.

Parents often use trusts to:

  • Set aside funds for education, housing, or health care
  • Avoid the delays and costs of probate
  • Prevent large lump-sum payouts to young adults who may not be ready to manage an inheritance
  • Plan for what happens if something unexpected happens to you

It’s a way to plan with intention, giving you peace of mind and offering your children support when they need it most.

Common Types of Trusts for Children

The right type of trust depends on your goals and your family’s needs. Here are a few we often recommend:

  • Revocable Living Trust: This lets you stay in control while you’re alive and set distribution terms that take effect after your passing. It’s flexible and can be updated as your circumstances change.
  • Irrevocable Trust: While this option limits your ability to make changes later, it offers more protection from creditors and may help reduce estate taxes.
  • Testamentary Trust: Created through your will, this kind of trust only goes into effect after your death. It’s often used when children are still young, allowing a trustee to manage funds until they reach a more mature age.
  • Educational Trust: If you want to focus your gift on a specific purpose, like schooling, this can ensure that money is used only for tuition and related expenses.

Each has pros and cons, and what works best depends on your goals, your child’s age, and your financial situation.

Trusts and Taxes: What to Keep in Mind

Setting up a trust can have tax implications, so it’s worth taking a closer look at how they work. Some trusts are taxed at higher rates than individual accounts, especially if they earn income and hold assets over time. Others can reduce your taxable estate and help you stay under Massachusetts’s estate tax threshold.

For example, irrevocable trusts can sometimes remove assets from your estate entirely, which could offer significant benefits depending on the size of your estate. On the other hand, revocable trusts won’t offer that same advantage, but they do give you more control.

Protecting Assets and Preserving Intent

A trust doesn’t just pass along money—it can also protect it. If your child later goes through a divorce, struggles with debt, or faces legal issues, a trust can help keep those assets out of reach.

You can also set conditions for how money is used or when it becomes available. Many parents choose to stagger distributions—for example, giving a portion at age 25, another at 30, and so on. This gives children time to mature and grow into the responsibility of managing their inheritance.

Planning by Age and Life Stage

A child’s age makes a big difference in how you plan. For very young children, a trust is almost always the best option. It allows a trusted adult to manage the money until the child is old enough to take on that role.

With teenagers or young adults, you might want to set limits, offering support for education, housing, or starting a career without giving them full control right away.

Even adult children can benefit from trusts, especially if you’re concerned about money management or protecting family wealth over the long term.

Choosing the Right Approach for Your Family

There’s no one-size-fits-all approach when it comes to trusts. Some families want to provide ongoing support. Others want to offer a safety net without encouraging dependence. Your child’s personality, values, and circumstances all matter.

We take the time to understand your goals and help you create a plan that reflects what matters most to you. Whether you’re setting up a basic trust or exploring more complex options, we’ll work with you to build a plan that supports your children and gives you peace of mind.

We’re Here to Help You Make a Plan

At Surprenant, Beneski & Nunes, P.C., we help families across Southeastern Massachusetts build thoughtful, lasting estate plans. If you’re considering putting money in a trust for your children, we’re here to help you figure out the right path. Contact us to talk about your goals and start building something that protects the people you love.