Trusts For Minor Children

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by Marc S. Galella, Esq., of R.C. Shea and Associates

  When parents have minor children, they often want to establish trusts in their Wills for the benefit of the minor children in the event that both parents should pass away. In such a case, the money is held in the trust for the benefit of the children. A person called the “trustee” is appointed by the Will to manage the trust on behalf of the children. Most trusts for the benefit of minor children allow the money to be used for their health, education, maintenance and support. The term “education” usually also refers to college education. There are several ways to go about doing this. The most common ways are the (1) common trust or (2) the separate trust.

  In the common trust, all of the money is held until the youngest child reaches an age specified in the Will. Upon the youngest child reaching the specified age, the monies remaining in the trust are then distributed to all of the children. In a separate trust, the assets are divided among the children and a separate trust is created for each child and each child receives their trust when the each reach the specified age.

  What are the advantages and disadvantages of each? The advantage of the common trust is that the money is held until the youngest child reaches the specified age. In this way, the trustee can use the money in the trust and if necessary, spend more of the money in the trust on one child as opposed to the others. As a parent, most people would be willing to spend everything they had on one child at the expense of the other children if that child required greater care than the other children. By using a common trust you give the trustee the flexibility to do this. The drawback to the common trust is that the older children will have to wait a longer period of time to receive their share of the inheritance depending upon the age of the youngest child. This could be a disadvantage if there is a significant age difference between the youngest and oldest child.

  The advantage of the separate trust is that each child will receive their share of the estate when they reach the specified age. This means that the older children do not have to wait for their inheritance until the youngest child reaches the specified age. The drawback to the separate trust is the trustee can only use the money in that individual child’s trust for the care of that child. If one child requires significantly more care than the other children, the trustee is limited to the amount of money in that child’s trust and cannot use the money in the other trusts. 

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  Which trust is better for you for your is something to be discussed with your estate planning attorney when making up your Will.