When people decide to make plans to allocate assets at the ends of their lives, they may want to ensure that their money goes to a specific person. If the recipient is a minor, it may be necessary to take extra precaution to ensure full asset protection. Here in Nevada, one way is to create a trust. There are many types of trusts, but they all serve the basic purpose of ensuring that the money will benefit the heir, and only the heir.
A trust for a minor will typically have a fiduciary designated — someone who will ensure that the money is used only for the purpose that it was intended. This may be a trusted friend, relative or even a professional fiduciary. For example, if a grandparent wanted to leave money to a grandchild, their mother could be designated the fiduciary. This would prevent anyone else from using the money for any purpose of which the grandparents may not approve.
An untrustworthy third party may not be the only person who is kept from frivolously spending a trust. In some cases, those who create trusts may have reason to be concerned that the minor might not use the money in a responsible manner, or simply in a manner for which the trust was meant. The trust can be designated specifically to be used for education or a home loan, for example. It may even be distributed at certain points in the minor’s life, such as upon completion of high school or when he or she marries. In this way, the creator of the trust can feel reassured that his or her wishes will be honored and that the minor will be cared for.
The varying types of trusts here in Nevada will determine what type of asset protection is right for a certain person. Though many may feel that a trust is only useful for the wealthy, this is not always the case, as trusts can have different purposes and amounts. Those who choose to make use of this portion of estate planning can rest assured that their finances will be distributed according to their directives.
Source: lakeconews.com, “Estate Planning: Protecting a minor’s inheritance“, Dennis Fordham, Oct. 4, 2014