3 Mistakes Parents Make When Setting Up A Trust For Their Children

Establishing a trust for your minor or adult children is a great way to protect their inheritance. But it only works if it’s done right. There are several different types of trust for you to choose for what is best for you and your family. Unfortunately, parents make some common mistakes when setting up a trust for their children.

Why Set Up A Trust?

Estate planning and trust funds are not only for the wealthy and famous. That is one of the many myths surrounding trusts. Setting up a trust is a tool that can protect your legacy now and in the future.

There are several reasons why you may want to establish a trust. A trust can potentially reduce estate and gift taxes for your beneficiaries. It is also an excellent way to protect your loved ones against lawsuits or debtors after you’re gone. Plus, a trust will keep your estate out of probate court – saving your loved ones time and money.

A special needs trust can be established now if you have a special needs child. This ensures money for your child without it infringing on the governmental benefits.

While these are all great reasons to establish a trust, there are some mistakes you’ll want to avoid.

Mistakes Parents Make When Setting Up A Trust For Their Child

It’s wonderful that you want to set up a trust for your child. But watch out for some common pitfalls. Here are 3 mistakes that parents make when setting up a trust for their child:

1. Appointing the wrong trustee
   Simply because someone is family does not mean they will make the best trustee. You’ll want to choose someone who can handle this huge responsibility. Some items about a trustee to consider are their age, where they live and whether they will always have your children’s best interest in mind.
2. Too much or not enough discretion
   There will always be certain situations that you cannot consider, but your trustee will need the right amount of wiggle room to decide if funds should be released to the child and how much.
3. Not reviewing and updating the trust
   As with your estate plan, you should periodically update and review your trusts. Is your named trustee still your first choice? Do you need to add or remove a beneficiary? Do you have a new way to fund the trust? Has the value of your trust increased or decreased?

A trust is a way to provide for the financial future of your loved ones. Working with an experienced estate planning attorney can help you choose the right trust and periodically update it.

DuPage County Trusts Attorney

Do you have questions about protecting your assets in Illinois via a trust? Our experienced trust attorneys understand applicable laws and can advise you on the best options to protect your assets and your loved ones. Contact the Estate & Probate Legal Group at 630-864-5835.

AREAS WE SERVE: Cook, Dupage, Kane, Lake and Will counties