Like you, we are concerned about the future. That is why we believe that the best time to set up a trust for your minor is now, because you can never be sure what might happen tomorrow. If you pass away before your child reaches adulthood, for example, your child cannot receive the property inherited from you. The property must be managed by an adult until your child reaches at least 18 years of age. If you have not established a testamentary trust in your will, the court will decide who manages your estate.
At Estate Planners of Arkansas, we believe that the matter of your child’s inheritance should be managed by you. To that end, we advise our clients to engage in estate planning sooner rather than later. Ensure that you have the documents in place to protect your child and their inheritance from those who may not follow your wishes. Read this handy guide to estate planning, and learn how you can set up a trust for your minor with the pros at Estate Planners of Arkansas, P.A.
What is a Trust?
A trust is a fiduciary arrangement in which a trustee is appointed to manage the property transferred to and held by the trust for the benefit of the trust’s beneficiaries. You can choose from several different types of trust agreements to accomplish your goals. Some of the different types of trusts include:
- Revocable Trusts
- Irrevocable Trusts
- Minor Trusts
- Asset Protection Trusts
- Charitable Trusts
- Special Needs Trusts
- Domestic Asset Protection Trust
- Qualified Personal Residence Trust
Trust agreements offer a wide variety of benefits. For example, an irrevocable trust protects assets from your creditors and your heirs’ creditors. Trust agreements can help you avoid probate and reduce or eliminate estate and gift taxes. A special needs trust provides for the care of a person with disabilities, impairments, or other special needs. Charitable trusts allow you to manage the property for the benefit of one or more charities.
Minor trusts are used to protect inheritance and provide for the needs of a child under 18. You can use a trust to leave property to your child, grandchild, or any minor. Many individuals create trusts for minors as they engage in estate planning in Arkansas. You can also determine at what age the minor can access the trust.
A testamentary trust is a trust that is set up within your will. It is relatively easy to set up a testamentary trust for a minor. In your will, you name a trustee for the minor, and direct that the property inherited by the minor is held in trust until the minor reaches a specific age. When the child reaches the age designated within the will, the trust terminates, and the property transfers to the individual.
Most testamentary trusts state that the property within the trust is for the benefit, upkeep, and education of the child. Keep in mind that the trustee has broad discretion on how to use the funds. If you do not wish the probate court to be involved in a trust you have set up for your minor, you may want to choose a revocable living trust instead of a testamentary trust.
How To Set Up A Trust for a Minor
It is easy to set up a trust for a minor, but choosing the best trust agreement for your situation requires some familiarity with estate planning. Some trusts may not be as flexible as other types of trusts. In addition, some trusts provide a higher level of protection for assets than others. Differentiating which agreement is right for you and your minor sometimes warrants the council of an experienced Arkansas estate planning lawyer, like those on our legal team at Estate Planners of Arkansas, P.A.
How to Set Up A Trust for a Minor While You Are Living
A revocable living trust holds the property for your benefit during your lifetime and for the benefit of a minor at your death. You may appoint a trustee to manage the trust property, or you may act as the trustee yourself. You also appoint a successor to assume the responsibilities of the original trustee, should they become incapacitated.
Upon your death, the revocable living trust becomes an irrevocable living trust managed by the successor trustee you previously appointed. The successor trustee manages the property until such time as the trust agreement directs the trustee to transfer the property to the individual.
A revocable living trust has several benefits. You can change the terms of the trust at any time or terminate the trust before your death. The property within the trust does not go through probate upon your death. Therefore, a revocable living trust is not a matter of public record and is not subject to review by the probate court.
Estate Planning in Arkansas to Protect Property Designated for a Minor
Setting up a trust can ensure that your minor receives the support needed until they are able to inherit your estate. The Estate Planners of Arkansas, P.A. assist clients in choosing the trust agreement that provides the benefits and protections they desire for their child.
Contact our office by calling 501-414-8965 to schedule a free consultation with one of our experienced Arkansas estate planning lawyers.