Friday, June 5th, Attorney, Steven M. Berger discusses Trusts for Children.
Most of these are created upon the death of the parent though sometimes trusts are created during lifetime with completed gifts.
We create a pot trust which goes to all the children and when the youngest reaches a certain age, anything left in the trust is distributed outright.
A stewardship trust allows the children to be their own trustee and take out what they need and when. It is usually for what we call health, maintenance and support. They can spend it on themselves, but just can’t spend it all at one time. Sometimes we also indicate specific amounts of distributions such as 1/3 at age 25, and remaining at 35.
The lease restrictive trust is to allow beneficiaries to take out what they need at their discretion. However, they don’t have to.
For tax purposes, the beneficiary deemed owner trust is easier to manage and gives the beneficiary a 1099 they add to their 1040.
A more common option is that the trust is a separate taxpayer. If it does generate a fair amount of income then it is taxed at trust tax rates.
Asset protection trusts are done best with a corporate trustee so they make the decisions and can’t be forced by a creditor or former spouse. There are costs involved, but provides a very good option.
Submit your question
Bring your questions about estate planning and administration to our weekly Facebook Live with Mr. Berger on Fridays at 11am EST. Leave your email if you’d like to receive a notification of our response.