Can You TRUST Your Children With Money?
NOVEMBER/DECEMBER 2015
We all know that we need to have a will prepared to designate guardians to take care of our children if we pass away before they turn 18. Many of us 
also understand that we should leave our assets in trust for the benefi t of our children until they reach a certain age. But what variables should you consider when creating trusts for your children?
Pot Trusts Versus Share Trusts
A “pot trust” arrangement is a way to leave your assets in one trust for the benefi t of all of your children. The funds are used as needed for each of your children, without having to equalize the distributions among your children (which is more along the lines of how we parent our children). The funds could potentially be used up for the benefi t of only one child. A “share trust” arrangement is a way to maintain equality among your children regardless of their needs. In this case a separate trust would be established for the benefi t of each child. Of course, your younger children may not receive the full benefi ts you were able to provide to your older children while living.
Term Trusts Versus Lifetime Trusts
Another important variable to consider is how long you should keep the trusts for children in place. There are two basic approaches. The fi rst is a “term trust” which means that the trust terminates when your children reach a certain age, with the balance being distributed outright to your children. The second approach is a “lifetime trust” which terminates when your children pass away with the balance being distributed to your grandchildren. The largest benefi t of the lifetime trust approach is that the assets held in trust are protected from your children’s creditors, including ex-spouses.
Discretionary Versus Incentive
You should also consider if you want your children to have full discretion to use the trust funds or if you want to limit their access and provide incentive for your children to accomplish certain goals in life. If you are interested in learning more about creating a trust for your children, I’d be happy to speak with you about a plan that fits your needs.
Jennifer C. McManus Attorney
Davis Agnor Rapaport & Skalny, LLC
10211 Wincopin Circle, Suite 600Columbia, Maryland 21044
PHONE: 410-995-5800
EMAIL: [email protected]
