When working with parents of minor children, or grandparents who intend on leaving assets to grandchildren that are currently minors, the most prevalent question that arises is how to protect the gift from the gift recipient, ie the minor child. They want to know how to use this gift to benefit the minor children, how to keep it from being a burden to them and how to best ensure that the inheritance is not wasted.
Luckily, Idaho law allows a solution, a Revocable Living Trust (there are many different types of trusts, many of which can accomplish the goal of this topic, but as this is the most common trust we will talk about it).
How does a Trust work? A Trust holds the property the Grantor (you as the creator of the trust) intend to distribute to beneficiaries in trust, to be distributed following the guidance provided in the Trust Agreement (ie the Trust document). This is different than a simple Will based Estate Plan, where the inheritance is distributed immediately to the beneficiaries, regardless of age.
This is a simple and yet great tool, allowing for many opportunities to tailor your trust to your specific family situation. Do you want to give your minor kid’s gifts in five year increments after your death? Great, you can do that. So, the minors in your life could receive ⅓ of their inheritance at your death, ⅓ five years later, and the remaining ⅓ ten years after your death. Easy. But, those are just sample numbers. You are basically limited by your imagination.
If you wanted to gradually increase the gifting percentages as your beneficiaries get older, you can do that as well. 10% one year, 15% three years later, 25% five years later, etc…
Unfortunately, many of us have to address concerns or special needs of our beneficiaries. Want to ensure that the gifts you give do not limit the amount of government funding for a child with special needs? We can create a Special Needs Trust to best benefit your child.
Most people that want to leave assets to minor children are concerned that if the child receives their inheritance at age 18, that it will be lost, frivolously spent, misappropriated, used on illegal substances, or burden them in future debt that would not have been a problem if the child had not received the inheritance. We were all young once, and many of us made decisions that we regret to this day, especially concerning money.
So, if you want to ensure that your minor beneficiaries receive their inheritance in a controlled manner, according to what you are comfortable with, a Revocable Living Trust is your solution. A simple Will simply is not enough.