Little or poor planning can have devastating effects on the lives of your children. Few tasks we attempt during our lives have a greater impact on our family than creating an estate plan, but the worst thing you can do is to leave your property to your minor children outright. If you do, the probate court would actually control this money until your children are adults. Leaving property directly to adult children can also have pitfalls, depending on the responsibility and maturity levels of each child.

The best way to plan for minor children is by providing for them through a Common Trust. This can be created as a part of your will or trust. The trustee of the Common Trust can provide your children with as much income and principal of the trust as each child requires for his or her individual health, maintenance, support, and educational needs. The trustee can make sure that the children with the most needs are properly cared for. The Common Trust can ensure that your youngest child’s basic needs are met before the assets are divided among all your children.

A typical Common Trust remains in existence until your youngest child reaches a specific age. When the Common Trust terminates, you can then leave each child’s share in his or her own Separate Trust, if desired, or allow outright distribution. Separate Trusts can call for distributions of the trust principal over time. For instance, the terms of a child’s trust could provide that a child is to receive one-third of the trust share upon reaching the age of 30, one-third at age 35, and the balance at age 40. The trustee of the child’s Separate Trust can be given the discretion to distribute principal and income for your child’s basic needs, as well as special needs of buying a house, or purchasing a business. If your child dies before the complete distribution of his or her trust share, you can control where the assets will then pass.

Leaving property to your children in trust as opposed to outright can protect your children from their own youth or inexperience with handling money. Many young people are overwhelmed by immediate and uncontrolled wealth, and their inheritance can prove to be a source of destruction rather than a blessing. Your child may no longer see a need to continue getting an education, to maintain good grades, or to remain employed.

With older children, their newfound wealth may provide them with too much unproductive time and independence. They may spend too much, quickly and unproductively. This, in turn, can put a strain on their family life. Leaving property in trust for your children can provide them with protection from their creditors, from an unsuccessful marriage, or from constant requests for loans from relatives or friends. It can provide them with crucial asset management and investment assistance to help preserve the inheritance. The factors which need to be considered to best determine the amount of money to leave a child and in which manner are the following: His or her age, the individual’s maturity and financial savvy, and the amount of the child’s own estate. Also to be considered are the child’s relationship with his or her spouse and family, the standing with creditors, and individual needs. They key to proper planning for children is not simply to leave money, but to leave money intelligently.

Jeffery J. McKenna is a local attorney serving clients in Nevada, Arizona and Utah. He is a shareholder at the law firm of Barney McKenna & Olmstead, PC, with offices in Mesquite and St. George. If you have questions you would like addressed in these articles, you can contact him at (435) 628-1711 or jmckenna@barney-mckenna.com.