Barrett Legacy Estate Solutions

How Can Common Trusts Help Protect Your Family?

Parents strive to make their children feel equally valued as reflected in the fact that, when setting up an estate plan, parents typically divide their accounts and property equally among their children. But while parents strive to treat their children the same, they simultaneously acknowledge that children have different needs at different times. And these needs do not always correlate with perfectly equal dollar amounts.

Should something happen to you and your accounts and property pass to your minor children in equal shares, there may not be enough money for each individual child’s expenses. Almost certainly, one child will require more funds than another. Instead of simply dividing your accounts and property equally among your children, you can place accounts and property in what is known as a pot trust or common trust with instructions for your trustee on how to spend the money and property on behalf of all the beneficiaries.

The basic mechanisms of a common trust are as follows:

The key benefit of a common trust is flexibility. You are giving the trustee the same spending discretion that you currently exercise. They have the authority to manage money for the family in the same way you would. This is not only a heavy burden for the trustee but a big decision for you because the trustee will be forced to manage family dynamics, objectives, and interests. Choose wisely.

From your point of view, a common trust might be the fairest way to handle leaving accounts and property to your minor children, even though it is not 100 percent equal. Of course, your children may have a different outlook. Older children could resent waiting until the youngest child reaches adulthood to receive their share of the funds. And by then, depending on the size of your estate, the funds might have been depleted by the younger children.

To learn more about common trusts and how they can protect your children, as well as other important estate planning tools, please schedule an appointment with our law office.