Creating a trust for minors can help you provide your children with financial support if you pass away. Many parents choose to create a trust for minors because doing so allows them greater flexibility to protect their children than using a last will and testament. Several types of trust can provide children or other minors with financial support while minimizing tax liability.
The attorneys at Willcox, Buyck & Williams, PA provide effective legal counsel for estate planning clients in Florence and Myrtle Beach, South Carolina. If you are considering creating a minor’s trust, we can help you understand your options and work with you to create a trust that reflects your unique needs and goals. Contact Willcox, Buyck & Williams, PA to schedule an initial consultation and learn more about how a trust for minors could benefit you and your loved ones.
Understanding Minor’s Trusts
Generally, trusts for minors are set up by parents or other relatives who would like to leave property to a minor child. One of the main benefits of setting up a minor trust is to ensure that the assets in the trust are cared for by an adult until the minor is old enough to be financially responsible. Minor’s trusts can be established within a will or by creating a separate living trust.
A parent can leave property to the minor through a will or trust document. The document usually states that if the minor is still under 18 when you pass away, a trustee will be responsible for caring for the property until the child reaches the age you state. As the creator of the trust, you can determine when the minor will be allowed to have access to the assets in the trust. You can also determine how long you would like the trust to remain in effect — i.e. whether you’d like it to be permanent or whether the trust should come to a conclusion at a specified time.
Appointing a Trustee for a Minor’s Trust
The trustee or trustees you appoint will have a fiduciary duty to manage the property in the trust to benefit the beneficiary. When the appointed time comes, you can direct the trustee to transfer the assets in the trust from the minor’s trust to the beneficiary outright, including any income that the trust has provided. Most minor’s trusts allow caretakers to access a portion of the assets in the trust to care for the minor until he or she reaches the designated age.
It’s crucial that you appoint a trustee or trustees you believe are capable of managing the trust. Some parents appoint an attorney or a professional trust management company to manage the trust. It is always wise to include an alternate trustee in case the named trustee is unable or unwilling to fulfill the duties of a trustee.
How a Trust Protects Your Child
Several benefits come from creating minor trusts. Without establishing a trust, your child could receive their entire inheritance the day they turn 18. Some 18-year-olds are more mature than others, but few can handle a large sum at one time responsibly.
If your child is subjected to a lawsuit or has creditors, the creditors could seize all or part of their inheritance. Until your child turns 18, a conservator will control your assets on behalf of your child. You may have appointed a guardian you trust, but the guardian could act unethically by repeatedly borrowing money from your child. You may appoint a person you trust to be a guardian of your children. Still, that person may not be the best person to manage your child’s inheritance for them. By creating a trust, you can appoint a trustee with extensive experience managing assets in a trust.
How to Set up a Trust for a Minor
The best way to establish a trust for your minor child is to work with an experienced attorney. When you meet with the attorneys at Willcox, Buyck & Williams, PA, we will guide you through every step of the process. We will answer any questions and help you make informed decisions about what type of trust will best help you to achieve your estate planning goals. We will draft the trust document incompliance with South Carolina law and ensure it is executed properly and signed by you. Once the trust is created, you will need to transfer assets into it to make it effective.
Which Type of Minor’s Trust Is Right for Me?
You can create several types of trust to protect your minor children and provide them with financial security after you pass away. For example, 2053 (b) or (c) trusts are specific types of trusts that can help your child avoid paying gift taxes. As of 2023, there is an exemption for gifts valued at $167,000 or less per year per recipient. When specific requirements are met by creating a trust compliant with IRS code 2053(c), you can give up to $17,000 per year to a child’s trust without incurring a gift tax.
Another option is to create a §2503(c) irrevocable trust. Parents may decide to create a child’s trust that holds specified property for a single child. A separate trust can be created for each child. Alternatively, you can create a family pot trust to provide for more than one child.
Discuss Your Estate Plan with an Experienced South Carolina Attorney
Creating a minor’s trust does take some work and initiative. Still, it can yield significant benefits, including the peace of mind that the money you’ve earned for your family’s security will provide for your child or children after you’re gone. If you’re considering creating a minor’s trust as part of a comprehensive estate plan, the attorneys at Willcox, Buyck & Williams, PA are here to help. Contact Willcox, Buyck & Williams, PA to schedule a complimentary initial consultation and learn more.