Although the legal age of majority here in Texas is 18 years old, I have yet to meet a parent that agrees with that definition! If you don’t plan in advance, your child would be able to directly access their inheritance on their eighteenth birthday. If something happens to you and your spouse, would your child responsibly manage sudden control of all your assets, or would they blow it all on unwise spending?
Luckily, you can plan in advance for this problem through the use of trusts. These trusts can be set up in either a living trust or will-based estate plan. They can end at a certain age, or instead gradually distribute the trust assets at several age-based benchmarks. The trust can even continue for the rest of the child’s life!
While a trust is active, the trust property is protected from most of your child’s creditors, and a responsible third party or financial institution, called a trustee, responsibly distributes money to your child for their needs. Many clients select an age like 25 or 30 for the trust to end, when their child is likely more mature and able to manage their inheritance.
If you are worried about your child getting too much inheritance, too fast, give us a call and we can talk through ways to protect them.
This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, specific tax, legal or accounting advice. We can only give specific advice upon consulting directly with you and reviewing your exact situation.
