Betty and her daughter have had problems for years, and they no longer talk.

Her daughter is prone to unpredictable behavior and has never been good at money management.

Unfortunately for Betty, there are two grandchildren that she also doesn’t get to see because of this rocky relationship.

While getting her estate papers up-to-date, Betty visited her lawyer to find out how she could leave her assets to her grandchildren without the risk of their mother getting the money and spending it on her own purposes.

Her lawyer suggested she set up trusts for each of the children.

What Is a Trust?

A trust is a legal way to put your money or other assets in a “box.”  The box, in this case, is then managed by someone you trust.  In the case of a situation such as described above, the assets in the trust are protected from all parties until it is time to transfer them into the hands of the person who is supposed to inherit them.

The person setting up the trust decides when that appropriate time is, such as upon a special birthday like the 18th or 21st, or an event such as college graduation or marriage.

Trusts are a very flexible way to ensure your assets get used, managed, and distributed in the way you intend them to.

Finding a Trustee

The trustee is the person you select to manage, or oversee, the trust.  Trustees are normally people or organizations who have nothing to benefit from the trust. For example, many people place a lawyer or bank in this position. If you feel there may be some reason the first trustee might not work out due to age or other circumstances, you should choose also to designate a backup trustee.

Some criteria you might look for in selecting a trustee:

  • Someone who is trustworthy.
  • Someone not easily manipulated or pressured to act against your desires for the trust assets.
  • Someone that will not misuse the money and assets in their care.

Figuring Out the Distribution Terms of Your Trust

A great thing about trusts is that you determine when and how the assets they protect will be distributed.

For example, you can have the trust assets distributed in a lump sum or spread out over time. Some people also put stipulations into their trusts concerning when the funds may be made available ahead of time for certain things like medical emergencies, college tuition or the purchase of a house.

If you are worried that a trust recipient may be frivolous with the funds, you can set stipulations that will allow the funds to be distributed much like an allowance, with larger amounts only being given for important reasons.

When trying to determine the restrictions to place on distribution of the trust or what the distribution terms will be, try to picture the recipient’s needs over time.

You might also make it a stipulation that any requests for advance payments not only be verified but also be distributed to the source of the need. For example, if extra money is required for college tuition, you can specify the money be released only to the school itself and not the student.

We Can Help

As you can see, a trust is a very useful tool for protecting your assets and ensuring they are distributed how you wish them to be.  However, designing a good trust, finding a trustee, and working through countless distribution scenarios can be challenging for anyone to figure out on their own.  We help mothers in creating trusts and fully comprehensive estate plans.  We are here to help you!

Contact us today to start discussing how to establish a trust for you and your family.