Being a parent isn’t just about feeding your child, making sure they go to bed on time, and giving them a good education. You also have to worry about their overall well-being and their financial security in case something happens to you and your spouse. A great way to ensure their financial future is to draft a trust and name a trustee. When it comes to you or your child’s financial future, you may have a lot of questions. QualiTax is here to help! Not only do we provide professional tax services, but we provide the financial advice that you need as well. Contact us at QualiTax and speak to one of our experts in person or over the phone today! To give you an idea of what a trust can do for you and help you decide if it’s a better option for your family, we will highlight some of the key components to establishing a trust for your child’s future.
How much money do you plan to leave your child?
Depending on the amount you plan to leave behind, you may choose a trust over a standard will. If the total sum of money or assets you plan to leave behind is greater than $100,000 (this includes life insurance, a house you own, etc.) then a trust might be the right way to go. If the sum is less than $100,000, it may not be worth the effort to establish a trust for your child.
Do you want a say in how your money is spent?
With custodial accounts, there is always the chance that the person left in charge of the account could spend the money in ways you may not approve of. A trust gives you peace of mind because you are allowed to restrict the money for use on basic necessities like food, clothing and health care. You can even specify that the money go towards a good education. Managing money takes up a lot of your time that you could be using to do something else. At QualiTax, we are here to help you with tax planning as well as other financial matters. We can help you set up your child’s financial future. For tax planning or financial help, contact QualiTax today!
Would you rather your child inherit the money at a certain age?
Should you decide you want your child to spend their inheritance on a college education, you can specify that the trust not be available until your child reaches the age of 18. There is also the option to say your son or daughter can’t have access to their inheritance until they are older or even that they can have half at the age of 30 and the rest when they turn 35. The benefit of this is that it takes away the hefty burden of having to deal with weighty financial decisions at a young age.
Do you want consequences for money mismanagement?
Another advantage to a trust is that if the guidelines you set forth are not followed, the beneficiary can take legal action. A trust is a legal contract meaning if the beneficiary of the account feels the trustee is not using the funds properly (i.e. they went on a shopping spree instead of using the money for college), the beneficiary can sue for reimbursement. These types of legal actions can be hard to prove but the threat might be enough to keep your child in line with their spending. QualiTax wants to help you with all of your financial needs, whether that be planning for your child’s future or assisting you with your tax planning. Our tax consultants can answer your questions and help you decide what is right for your family. Contact us today to set up a consultation!