Posted on: 12 May 2023
When you're ready to finalize your estate plan, one element you might consider is a trust with predetermined access restrictions. These types of trust funds are popular for minors and young adults when you have concerns about their financial responsibility. Your estate planning attorney can help you draft the trust and its limitations, but here are a few milestones to consider for fund disbursements.
When a teenager passes the driver's test, he or she receives their license. Many teens dream of getting a car for their 16th birthday or after they receive their license. If you are establishing a trust fund for a minor, consider releasing a portion of the funds when they receive their license. This could provide them with the money needed for a down payment on a vehicle, and you can even stipulate that the trust administrator evaluate the purchase for safety and reasonability.
A disbursement for high school graduation is a way to reward those years of hard work in school and to celebrate the achievement of graduation. This can pay for a summer celebration or just help your child cover the bills for their summer before college.
If your child decides to go to college, you can include disbursements from the trust fund for their college tuition, housing expenses, and other costs. Set a specific amount each year and ensure that the spending is moderated by the trust administrator so that your child doesn't spend their entire year's disbursement early in their academic year. You can also set an amount to disburse as an award when they graduate from college.
Buying a Home
Help encourage financial stability and independence by setting aside a portion of the trust fund to use as a down payment for a home. This allows your child to secure a mortgage earlier than they might otherwise qualify, ensuring more stability.
Finally, you can identify a specific age or a milestone, such as marriage, at which point your child gets full access to the remaining balance of the trust fund. Consider this defining milestone carefully to provide the best chance of responsible spending and money management.
These are just a few of the most common considerations when you are establishing a milestone-based trust fund for your child as part of your estate plan. Talk with your estate planning lawyer for more information and things to consider.Share