If you have minor children, it is critical that you set up a Trust for your children, in the event that you die prematurely. In most instances, this is done as a “testamentary trust,” which is a trust created in a Will that is not funded until the time that monies and assets would otherwise be distributed to minors under a certain age or ages (which the parents would determine when they prepare their testamentary trusts).
Under Florida law, if a minor becomes entitled to receive property having a value greater than $15,000.00, it will trigger the need for a minor’s guardianship. Minor’s guardianships are administered through the Courts and are expensive and cumbersome ways to manage money for a child. Furthermore, at age 18, the state of Florida considers that child to be “an adult” and requires that all of the money and property in the minor’s guardianship be turned over to the 18-year old to do with as he or she deems appropriate.
Perhaps the most foolish example that we have heard of regarding spending by an 18-year old beneficiary who made a poor decision about spending money received after disbursement from a Guardianship was an expenditure of more than $20,000 to soundproof a rental house (owned by someone else) so that the 18-year old and his friends could have “band practice” at the house.
Many times we encounter parents who are unaware of the need to create a trust to stretch out the time when significant assets will be turned over to their children. And, to compound the problem, often times, parents unwittingly name their children as contingent beneficiaries on large life insurance policies without understanding the consequences. Once they learn that they can and should control this, most parents opt to control disbursements and lump sum distributions until their children are more mature (age 25 or 30, for example).
Let us help you with these critical decisions. Our Estate Planning attorneys at Gibbons | Neuman are ready to help you and your family plan for the future.