When you can’t be there: In any circumstance where adults are temporarily or permanently unable to attend to a child’s health, education and welfare, proper planning will protect both the child and the assets to be used to meet the child’s needs. See the article at “Disability Issues.”
Trusts can be the answer: As you consider how to best cover the needs of a child a trust can become the centerpiece of the planed protections. Trusts to attend to children’s needs are often created during life and augmented through a separate testamentary trust that comes into existence following death. Determine the objectives based on the child’s (children’s) needs – their abilities, disabilities, health conditions, educational opportunities. Everything is capable of being addressed by the terms of the trust. Shall the trustee have sole power to apply assets to costs and expenses? Shall beneficiaries have the power to demand distributions according to some measure controlled by the trust? The possibilities are limitless and can be tailored to needs existing when the trust is created and needs that could arise as circumstances change.
“Too much too soon” or “too little too late”– sometimes it’s hard to weigh just what should be made available to our children and grandchildren at the various stages of life. It’s common to establish trusts to pay for schooling and then to other matters. Every family is uniquely constituted. Different factors influence the objectives to be attained. As time passes other factors arise that can force a change in designs. While it’s not very difficult to establish trusts to pay for educations, first houses and other things many households are concerned about providing too much at early stages or too little in adult-stages of life. Only you can make determinations about when to make distributions and for what purposes. Because trusts are flexible almost without limitation it is possible to construct provisions that provide determinable standards to be followed in computing distributions. Additional provisions can block a “spendthrift’s” ability to demand distributions. Your trust document is the controlling force that will determine every element involving the management assets subject to the trustee’s control.
Concerned about a future spouse exhausting a descendant’s resources? There are tools available to address such concerns. Are the support-related needs of one descendant likely to be much greater than another’s? Burdened by the frictions that can arise when one descendant’s needs result in disparities in distributions? All such concerns have resolutions, and trusts can be tailored to address every sort of problem you might wish to plan for. There are even ways to apply positive influences to the decisions distributees might ponder as different “opportunities” emerge as time passes. Trusts are powerful tools.
Intervivos appointment of guardian before need arises: Should you and your spouse die prematurely or become incapacitated, who would you pick to care for the children? By appointing your preferred candidates by an intervivos document you can establish your preferences who could be appointed as guardian in the event parents cannot act. You might also consider who you would appoint as your own guardian in the event or your temporary or permanent disability. Sound planning should involve considering this issue and discussing your plans with the person(s) you trust to take on the task. There are good reasons for selecting who should be appointed as guardian of children and of ourselves in the event of our incapacity. Texas Probate Code sections 676 and forward prescribe the permissions and technical requirements that must be met. Those statutes can be viewed through this link.
When a guardian is designated to attend to the affairs of an incapacitated person it is often better practice to segregate assets away from the control of the guardian. There can be strong reasons to establish a trust to hold assets administered by someone other than the guardian. One of those reasons is that if assets are held and administered by a guardian acting as guardian of the estate of the incapacitated person, public records are made that you might wish to avoid making. See Trusts: Avoid Public Disclosure of Assets.
Got questions? You can Ask Me.