One of the questions we sometimes get from parents as we’re working on their estate plan is, “Why do I need a trustee to manage assets for my children?” They then may ask, “Why can’t I just leave my money to the person who’s going to raise my kids?” For example, if I’m going to leave Tom and Betty in charge of my children, why don’t I just leave them the money?
Here’s what you need to know. If you leave the money that you intend to be used to raise your children and then be distributed to your children directly to, say, Tom and Betty, it becomes Tom and Betty’s money. There is no lawful obligation for them to pass it on to somebody else, or even to use it to support your children. There may be a moral obligation to do so, but not a lawful one.
Here’s a more important reason: Let’s suppose Tom or Betty got into a horrific car crash or some other situation and they were being sued for all kinds of damages. The money that you left them for the benefit of your children is now potentially at risk to their creditors. You can see now that leaving the money directly to Tom and Betty isn’t such a good idea.
So, what do you do? Instead, we usually want to leave assets in a trust that’s part of the will called a testamentary trust. When you decease (and assuming you don’t have a surviving spouse you leave the assets to) your assets are going to be moved into the trust and then managed by a trustee. The trustee will use those assets as needed to provide for the care and education and support and welfare of the children, and then once the children reach a certain age, the rest of the money can be distributed to them based upon a plan you’ve come up with and documented in your will. This is a much better plan than just leaving money to other people who might be looking after your children if something happens to you.
If you’ve got questions about estate planning here in Georgia and how to protect your family and your wishes, I invite you to request our free guide on estate planning in Georgia. We’ll be happy to send it to you, no strings attached. Or, if you’re ready to take some actionable steps to make sure your ducks are in a row, call us to schedule an appointment to get started with your own personalized estate plan.
Related posts of interest: