Maryland Trust Attorney: Pot Trusts and Separate Trusts for Children
When creating an estate plan, parents with minor children need to give special consideration to the ways in which they can provide for their children.
Testamentary Trust
For many parents, creating a Testamentary Trust will achieve their objectives of ensuring their assets are passed along to their children in an efficient and responsible manner. Without an estate plan, including a properly drafted Trust, the state will decide what your children receive, when they receive it, and who will oversee those assets until they are distributed to your children. This process often includes court and legal expenses that will be taken from your estate before it is passed on to your children.
After consultation, if you decide to create a Testamentary Trust for your children, you will need to decide the nature of the Trust as well as the Trust particulars. The Trust for the benefit of minor children can take many forms. In this post I will focus on the difference between Pot Trusts and Separate Trusts.
Pot Trust for Children
With a Pot Trust, upon your death your assets are held in a single Trust until the youngest of your children reach a designated age. When the youngest child reaches this age the Trust assets are usually distributed to all eligible decedents (your children and/or whoever else you designate). Without a Trust, state law decides when your children receive the assets, often times at an age where they are not mature enough to handle the responsibility.
A Pot Trust may be more equitable as it allows your younger children to receive benefits for education and other sums that have already been given to your older children before your death. However, if there is a substantial difference in age between your oldest and youngest children a Pot Trust may cause your eldest child to wait many years to receive their share of your estate.
Separate Trusts for Children
Separate Trusts for minor children are more flexible in that they divide the assets at the time of your death and place them, in equal amounts, in Separate Trusts for each child. With a Separate Trust structure each child will receive her inheritance in stages. For example: 1/3 the assets at age 25, ½ of remaining assets at age 28, and final distribution of all remaining assets at age 31. The percentage and ages can be tailored to meet your needs taking into consideration on your net worth, estate tax implications, and particular concerns for your children and estate.
To discuss what estate planning options would work best for you and your children, including Trusts such as Pot Trusts or Separate Trusts, and to discuss all the legal options available to you in making your plan, contact Maryland estate planning attorney Stephen J. Reichert at 410-299-4959, sreichert@reichertlegal.com or by clicking here.
Consultations are free and confidential. Day, evening and weekend appointments are available in office or at your residence. Serving clients in Baltimore City, Baltimore County, Anne Arundel County, Howard County, Carroll County, Harford County, Frederick County and Montgomery County.
- Posted by reichertlegal
- Posted in Estate Planning Baltimore Maryland, Estate Planning Maryland, Estate Planning Montgomery County Maryland, Estate Planning Potomac Maryland, Estate Planning Severn Maryland, Estate Planning Waldorf Maryland, Wills & Trusts Baltimore Maryland, Wills & Trusts Maryland
- Aug, 01, 2013
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