Trusts

Trusts

What are Guardianships and Trusts for Minor Children?

A minor child must have an adult guardian unless a court has declared he is legally "emancipated." The determination of who is a "minor" is a matter of state law.

Normally the surviving spouse becomes the personal guardian of your minor child. Parents should agree on who they want appointed as personal guardian of their children, in case both parents die simultaneously.

In the case of divorced or separated parents, the surviving parent will generally have the best claim to be the guardian of their child, although anyone may challenge a person's petition to be guardian of a child. If the surviving parent is unavailable, the courts will give great weight to the preference contained in the deceased parent's Will.

Minor children cannot own property. This means that there must be an adult legally responsible for supervising and administering property owned by a child. Thus, you need to name a property guardian for your minor children. Usually this is the same person who has been named as the personal guardian of the children.

If you have substantial property and you want this property to be managed on behalf of your child beyond the age of majority (i.e., age 18 or 21) you need to leave your property in trust. If you decide to establish a trust for your minor children you must choose a trustee and determine the age at which the property in the trust will be released to the beneficiary. The trustee should almost always be the same person as you chose as the children property guardian, and usually will be the person you designated as both the personal and property guardian. You should also name a successor trustee, in case your first choice is unable to serve. You also have the option of naming tow or more people to act as co-trustees.

What is a Testamentary Trust?

A testamentary trust, also know as a will trust, allows your property to be managed or held for the benefit of family members and other beneficiaries long after you die. Unlike a will, which disposes of your property immediately after your death, a testamentary trust can be set up to support a dependent spouse or minor children as discussed above, or a disabled relative. Since the rust is created in your will, it will not go into effect until you die and until your will has been probated.

To create a testamentary trust, you simply draft a will that meets the execution requirements for your state and include a clause that creates the trust. The trust clause will identify the person managing the trust, the trustee, the person benefiting from the trust (beneficiary) and the property placed in the trust (principal).

Also see article on Myths About Living Trusts by Dan Evans, Esq.