Most Pennsylvania parents want nothing more than for their children to have the best possible start in life. Part of that can mean giving them the resources to really take on the world. One great way to do this is by setting up a trust fund for them. However, there are some common pitfalls that parents would be wise to avoid when planning for their children.
Trusts and estate planning
The term estate planning can conjure up images of funerals and burials. But an estate plan is more than a will and a medical power of attorney. In fact, some of the best estate plans pass on assets to young people before their parents and grandparents are deceased.
Trust funds are, however, an important source of support for minors whose parents have predeceased them. The idea that trust funds are all about spoiling children is a dangerous myth. Trusts can be established to help young people defray the cost of college tuition, for example. In such cases, they only get the funds if they also go to school.
Managing the money
A trust fund is managed by a trustee, who is ideally a neutral third party. Parents who are setting up trusts for their children need to be very careful about selecting a trustee. It can be a good idea to offer this role to a financial professional. A non-specialist family member may love the child, but that does not mean they understand the best ways to manage finances. The estate planning lawyer who prepares and reviews the trust documents might have some input into the selection as well.