It's time to start working out the details of your estate planning. If you have children, this is particularly important since it's the estate that will provide for financial future once you pass away. When it comes to planning for the needs of your children, it's important that you understand the different types of trusts that might come in to play. These trusts are designed to protect your children's financial future. Here are three types of trusts that you might need to include in your estate planning if you have minor children to provide for.
Educational Trusts
When it comes to providing for your children after you pass away, you should consider educational trusts. These trusts are designed to provide funds for your children's education. Educational trusts can be set up for each of your children and will provide for any education-related expenses, including tuition, books and supplies, as well as living expenses while your children are in school. When setting up educational trusts, you can add provisions that will stop payments if your children drop out of school or fail to pass the classes they're enrolled in.
Minor Trusts
If you want to protect your children from the expense of taxes after you pass away, you should consider adding minor trusts to your estate planning. Minor trusts are designed to protect children from the high cost of gift taxes. Through minor trusts, you can gift money and property to your children that will remain tax-free until they reach adulthood. Once they take full ownership of the property and gifts held in trust, they'll be expected to pay the taxes owed on the property.
Special Needs Trust
If you have children who have special needs – such as learning or physical disabilities – you can set up a special needs trust for them. The special needs trust ensures that your special needs children will continue to receive payments for the duration of their life. Once your child passes away, any monies remaining in the trust will be paid to the other beneficiaries. The special needs trust protects assets from being seized should you pass away owing money to creditors or the government.
If you have children, you need to make sure that their financial future is protected. The information provided here will help you understand the trusts you can add to your estate. For additional information on how to protect your children should you pass away, be sure to speak to an experienced attorney from a firm like Acton & Snyder, LLP.
