Writing a will allows you to select people who should receive your assets. When you pass away, your assets are all gathered, debts are paid, and then what is left goes to the people named in the will.
If all of your heirs are adults, this may feel like an easy and natural process. You hand them the money to use as they see fit. But what if an heir is under 18 years of age? Say you have $500,000 that you want to leave to your child, but they’re only 16 years old. You worry about what that money would do to them. What can you do?
Guardians and trusts
First off, if you have a child who is under 18 years of age, you need to pick a guardian for them. This person can help avoid any sort of catastrophe. They take over your parental rights and responsibilities until your heir becomes an adult.
Another option is to put the money into a trust. It transfers to the trust instantly, but you can then determine when you want it to go to the heir. The easiest way is just to say they get the money at the age of majority. However, you may want to hold it for even longer or give it out in stages. Some people set up trusts so that 25% of the whole will be disbursed when the beneficiary turns 18 years of age, another 25% at 25 years of age and then the final 50% when the heir turns 30 years of age. What you do is up to you.
Setting up your plan
You want to know that you get your estate planning right. Carefully consider what legal options are best for your family, and don’t be afraid to think a bit outside of the box. There’s no one perfect plan for everybody.