Why You Need To Do A Trust For Your Kids
Sechler Law Firm, LLC
For more information about the author, click to view their website: www.sechlerlawfirm.com
Sep 09, 2024
Pennsylvania - Greater Pittsburgh Area
Why You Need To Do A Trust For Your Kids
If you have been listening to my radio shows or podcasts,
and reading my blogs, you will know that I have focused a lot on estate
planning for retirees, or soon to be retirees, and how to protect their stuff
and their family from the issues that they face. These include care costs,
eventual probate expenses and taxes. For most of my career I have been
dedicated to working through those issues. In fact, my law firm exists because
I watched my own grandfather go through all of this money paying for care.
Sadly he was battling Alzheimer’s disease and spent many years in a nursing
home. Having spent so many years working on elder law issues, we’ve become to
know how to properly plan for these issues.
Working With Young Families
Recently we’ve been working with folks from a young family
demographic. My wife and I recently redid our own personal estate plan because
our children are getting older, and there are changes in our financial
situation too. It is necessary every few years to see if our estate plan does
what we want it to do. Most of us learn from our experiences and the situations
we find ourselves in, and how to respond the next time. That’s one of the one
of the great things about life because we get to learn from mistakes and
challenges.
I’ve been through some challenges with some families that
are similarly situated to mine, when has thrown them a curveball. Many of them
have had to deal with injuries, disabilities and deaths, as well as unexpected
situations. This has made me realise the importance of needing to plan when it
comes to younger families. We actually have an entire webinar series for
younger families, called “Five Secrets to Protect Your Family”. We teach you
the things you need to know to protect your kids from the cradle to college.
Raising Good Humans
As parents of young children, I think our primary job is to
raise good humans who will be happy and self sufficient. Hopefully they will
find careers that they’re passionate about and a spouse they love and are happy
with. Eventually they will have their own kids and it is my job to prepare them
for that. I think we also need to accept that our duty of raising good humans
who will outlive us, is something we need to plan for too. We need to also face
the reality that although it would be devastating if both parents passed away
suddenly, there needs to be plan in place for the kids to be taken care of.
A Simple Will Is Not Enough
Unfortunately, most young parents of young kids don’t
actually plan for this. Most young families only have a will which will name
who gets the stuff when they pass away. Most young families often don’t have
many assets, so it is important for them to buy life insurance. You would
definitely need life insurance or a retirement account. While it is not enough
to only have a Will, it can be used to do some planning. You would need to name
an executor who will administer your estate, and guardians for your kids. A
guardian would essentially step into your shoes if you pass away. However,
guardianship ends when your child is 18 years of age. While they are considered
an adult at age 18, leaving money to your 18 year old could be a big mistake
for many reasons.
I know that people will advise you that you only need a
simple Will, which states that everything is left to your spouse and then to
your kids. If your kid is a minor when they inherit money, your kid will get
their money in a Uniform Transfer to Minors Act Account. This means that
somebody else would be in control of the money, until the kid turns 21.
However, after the age of 21, your kid is on their own. If I think about it, if
at the age of 21 I had been left an inheritance of a million dollars, I would
not have make good decisions with spending the money. I don’t believe most 21
year old kids would know what to do either. This illustrates why it is not
enough to just have a Will, and why one needs to plan for all eventualities.
Why You Should Create a Trust for Your Child
I would encourage you to create trusts. The Trust has
certain terms and conditions to determine what will happen with the money.
Wills have to go through probate which is the court administration process for
administering the Will. What happens when somebody passes away with a Will, the
executor can’t do anything until the judge allows him and it becomes a court
process. The Will is then mailed to the beneficiaries, with details of what
they’re allowed to have. This can take weeks or months to find out what the
deceased owned. The probate process is a time consuming task and also
expensive, and we advise to avoid it if possible. This is exactly why we
suggest using a trust.
Divorce is a Financial Threat
Rather than giving the money to your kids outright, the
money is held in a separate trust until they reach the age which you determine
is suitable. This is known as an underage trust and it protects the kids from
their own poor decisions as a youngster. When your child reaches the age you
have agreed upon which is often 25 or 30, for them to receive their
inheritance, the trust then terminates. However, you need to consider
protecting your kids from the next potential issue and the biggest financial
threat for adults in their 20’s and 30’s, which is divorce.
What I like to do is for my kid to become a trustee on the
trust. We’re not distributing the money so it doesn’t become a marital asset.
It would also be protected from the general creditors, divorces and lawsuits.
The money is held in trust for my kid until they turn 25 and can get control of
the trust. This is effective estate planning and is more important than having
a simple Will. It often happens that most people just do beneficiary
designations on their life insurance policies. When the parent passes away, the
kids get their money on their 21st birthday. This is not a good idea and it is
better for that money to be in a trust. Having a good estate plan in place
helps you to do your job as a parent and raise good people.
Register for our Webinar for Young Families
This is all possible when you start with education because
educated decisions are better decisions. That’s why we offer a free webinar
called “Five Secrets to Protect your family”. You can find it
sechlerlawfirm.com/workshops. We teach you a lot of the things you need to know
about how trusts work. We also share other important information you need to
know. Join us!
- To view the original version of this article visit sechlerlawfirm.com/articles-why-you-need-to-do-a-trust-for-your-kids/
- Seniors Blue Book was not involved in the creation of this content.
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Sechler Law Firm, LLC
Elder Law 20206 State Rte 19 Ste 300, Cranberry Township, Pennsylvania, 16066At Sechler Law Firm, LLC, our mission is to help families make great plans. A great estate plan is more than just a set of documents. It is a comprehensive and well thought out written strategy on how to deal with lifes unfortunate twists and turns. Our process first provides you with the education necessary to make informed decisions with regard to your planning. Then we put the proper documents and legal framework in place to respond to lifes unfortunate changes.Our Estate Planning law office is headquartered in Cranberry, PA. From this office, we happily serve the residents of Cranberry, Mars, Wexford, Pittsburgh, Butler and the residents of surrounding communities. As one of the regions only Certified Elder Law Attorneys, Tim Sechler and his team often assist families from across Western Pennsylvania.We understand that the pursuit of health, wealth and happiness is the goal of most families. We want you to be able to pursue these goals, or whatever goals you may have, knowing that you have a back up plan if life throws you a curveball like a death, disability or nursing home need. With education as our foundation, we will work with you to make decisions to Shield What Matters Most to you.Practice AreasEstate PlanningCustomized planning doesnt have to be difficult for you. We strive to make the process easy. The first step is to identify your concerns so that we can make suggestions regarding your plan.Elder Law Crisis PlanningA significant percentage of our practice is dedicated to helping families navigate the long term care maze. We help with Asset Protection and eligibility for Medicaid and Veterans Benefits.Trust And Estate AdministrationIf you have lost a loved one, we can help you take the necessary steps to help handle their affairs.Tims estate planning practice is focused on guiding clients through the complicated maze of balancing transfer strategies, wealth preservation, and family values in the planning process.Tim is a Combat Veteran, having served in Afghanistan as a member of the West Virginia Air National Guard. Prior to leaving the military, Tim had attained the rank of Staff Sergeant. His experiences in the military have led him to thoroughly enjoy working with Veterans and their families.Tim received his law degree from Duquesne University School of Law, and his Master of Business Administration from the Duquesne University Donahue Graduate School of Business. He received his Bachelor of Science in Business Administration from West Virginia University, majoring in Finance. Tim is licensed to practice Law in Pennsylvania and West Virginia.Recently, Tim has been seen frequently as a guest on KDKAs Pittsburgh Today Live, and has been quoted in several local print publications. For the last several years, he has been honored to be chosen as a Super Lawyers Rising Star, an award given to less than 2.5% of Tims peers. Tim enjoys educating the public about Elder Law and Estate Planning. He has spoken to thousands of people regarding estate planning and has averaged more than 50 speaking events per year.Tim became a Certified Elder Law Attorney* in 2017. A CELA is more than just an attorney who specializes in the field of elder law. CELAs are committed, through certification, to maintaining and improving their proficiency with continual practice and continuing legal education. Becoming certified in elder law validates a lawyers specialty to handle issues that affect senior citizens.Tim and his wife, Robyn, are raising three beautiful children in their home in Mars, PA.*Certified as an Elder Law Attorney by the National Elder Law Foundation.