Parents make countless decisions around the future they imagine for their children. They save for college, plan family vacations and think about the kind of home their children will grow up in. But there is another set of decisions that can be harder to consider: Who would manage the family’s finances if a parent died? How would children access money for their needs? Who could step in to protect their interests while they are still young?
A revocable living trust can help Wisconsin parents answer some of these questions before circumstances force difficult decisions. By establishing instructions for managing and distributing family assets, parents can account for their children’s financial needs at different stages of life. Three considerations can help shape that plan.
1. Decide how children will receive their inheritance
Leaving an inheritance directly to a minor child can create practical challenges. Children generally cannot manage significant assets independently, and a court may need to appoint someone to oversee the property.
A trust offers another option. Parents can name their children as beneficiaries and appoint a trustee to manage the inherited assets. The trust document can establish when children receive distributions and what expenses the trustee may cover, such as education, health care and living costs.
Parents can also set different distribution ages or conditions based on their children’s needs and maturity.
2. Choose a trustee and successor
A trustee handles the financial responsibilities outlined in the trust. These duties may include managing investments, paying expenses and distributing funds to beneficiaries.
Parents often serve as the initial trustees of their revocable living trusts, allowing them to retain control over their assets. However, they should also name a successor trustee who can step in if they die or become unable to manage the trust.
The right person should demonstrate sound judgment, financial responsibility and a willingness to follow the family’s instructions. Parents should also consider whether a professional or corporate trustee would better serve their children’s long-term interests.
3. Coordinate the trust with the rest of the estate plan
Creating a trust alone does not complete an estate plan. Parents must also consider how their other legal documents and financial accounts work together.
For example, Wisconsin Statutes § 54.15(6) allows parents to nominate a guardian for their minor children through a will, subject to the surviving parent’s rights and the court’s best-interest determination. A living trust cannot replace this nomination.
Parents should also review life insurance, retirement accounts and other beneficiary designations. These accounts may transfer outside the trust unless the designations direct assets into it.
Make room for the unexpected in the family’s plans
Children do not remain young forever, and the financial arrangements that serve a family today may need to change as they grow. A trust gives parents an opportunity to put important decisions in writing, from who manages family assets to when children can access their inheritance. Those decisions deserve careful consideration, especially when several people may eventually share responsibility for a child’s well-being. A Wisconsin estate planning attorney can help parents develop a trust that reflects their wishes and works alongside the rest of their estate plan.