Trust for minor child beneficiary

How can a Minor Beneficiary Trust be funded?

Who can be the beneficiary of a Minors Trust?

Guardian of Minor Children

Guidelines to Minor Beneficiary Trustees

How can Minor Beneficiary Trust be set up?

Use a minor's trust to make sure that a trusted adult will manage a young person's inheritance.

A Minor’s Trust is designed to manage and protect assets for a child until they reach a specified age. Some minor trusts are intended to provide funds to benefit a minor during childhood. Others may not allow any expenditure, with the goal being simply to hold and protect funds until the minor reaches adulthood.

Some trust deeds specify that trust funds may only be used for specific purposes, such as education, or medical expenses.

As a minor your child is not capable of holding assets in their own name if something happens to you or you may not want your child to get your assets until they reach an age where they develop the ability to take care of these assets. For all these purposes ‘Minor Beneficiary Trust’.

We have numerous optional trust arrangements available for you as the parents to choose from. A separate Minor's Trust should be set up so that you can be more specific in how long the funds are to be held in trust and provide guidelines to the trustee for distribution of additional funds to the guardian appointed for the child and for early distributions to the minor. Said trust may include additional children either born to or adopted by the grantors after the execution of the trust and may also include descendants of any child who may predecease you.

Heading or Tag Required.

Trusts for minors are usually set up by parents or relatives who want to leave property to a young person, but also want to name a trusted adult to care for the property until the child is old enough to be financially responsible.

There are a several ways that a trust can be created for a minor. These include:

• A minor inherits assets from an estate, and the Will specifies that the beneficiary’s inheritance is to be held in trust until they reach a particular age.
• Funds have been set aside by a family member for the benefit of the minor, for example, an education fund
• Funds have been awarded to a minor as compensation for the death of a relative
• Superannuation benefits can be paid to a minor from the entitlements of a family member

Generally, any child who is under the age of 18 years can be the beneficiary of a Minor’s Trust. The trust can have multiple beneficiaries.

You should give special consideration to the person or persons who will be the guardian over the "person" of your minor children (this will not apply to your grandchildren or other beneficiaries). Normally that person will not act as trustee or conservator over assets that are in the child's name. There are special provisions we can include that allow allocation of extra funds for a guardian.

We suggest you write a letter of guidance to the guardian of your minor children with specific instructions and guidance with regards to personal goals and objectives and authority for expenditures for particular activities or items you desire for the benefit of said children and include it as an attachment to your trust.

The Minor's Trust gives guidelines to the trustee to make early distributions to beneficiaries. The following example describes some of the alternatives available for inclusion in the trust to permit a trustee to distribute money to a beneficiary.

• Funds for college, graduate school or advanced degrees.
• Funds for acquiring certain assets such as an automobile, house, business, etc. This permits an advance of monies when a beneficiary has the indicated need.
• Funds for support, education, medical expenses, etc., for the named beneficiary's spouse and/or children. This gives broader discretion to the trustee if a need arises in a beneficiary's family.

The Minor’s Trust is designed to be very flexible such as providing options to encourage a beneficiary to maintain a high-grade average in high school or college, assist beneficiary for a wedding or birth of a child, restrict payments if a beneficiary is a drug or alcohol abuser or a spendthrift, or any other options which you desire to encourage your children to become responsible adults

This kind of trust can be set up within a will or living trust. In the document, you leave the property to the young person, but you also include a provision that says if that person is still a minor when you die, that you leave the property to a trustee who must care for the property until the child reaches an age you state.

The end-date for the trust can be any age you want, however it is not wise to have child’s trusts last too long. Age 18 is a minimum, because children younger than age 18 can’t legally control their own property. A maximum is probably early- to mid-30’s. By then, a person may be as mature as they are going to get.

The most common and practical approach when there is more than one minor beneficiary is to hold the trust as a single trust until an event happens. Think of it this way, the trust is to replace you in providing for your children until they are self-sufficient. If you were alive you would support each child until he or she is self-sufficient. No one knows how much it will cost and it is better to make an older child wait a while than to run out of money before a younger child can support himself or herself. Remember you already supported that older child to his or her present age.

The trust may also end when a specific event occurs or milestone is achieved, like the completion of higher education for example.

The detailed delay distributions and the guidelines for early distributions outlined above for minor children can also be used for grandchildren, adult children or other persons for whom you do not want immediate distribution or for whom you want to protect from creditors, spouses, etc.

A well-planned Minor’s Trust will provide guidelines to the persons who will be guardians over your young children. It is a place for you to state your desires regarding aspects of raising your children. This trust will also provide instructions regarding the administration of the property you leave behind to take care of your children. Again, you provide guidelines to the person controlling the money (the trustee) as to how you want money spent to support your children and what you don’t want money spent on. A well-developed Minor’s Trust is a set of instructions for the person you have chosen to do what you would do if you were still alive and able to raise your children. Most often the person who is the guardian (this is the person your children will live with) may not be the same as the person who is the trustee (the person who manages the money for the children).

Talk to a NexGen Estate Planner to set up a Minor Beneficiary Trust to protect the assets you may leave behind for your children.

NexGen Estate Planning Solution has been helping Indians establish and manage trusts for many years. We have expertise in trust administration and can act as your trustee.