Whether your will has a provision that establishes a testamentary trust in the event a minor inherits under your will or you simply create a trust for the benefit of children, grandchildren, great-grandchildren, etc., a trust is a useful tool in leaving wealth to minors.

Using a trust to transfer wealth to a minor has several advantages.  Primarily, the trust avoids a probate or administration proceeding in Surrogate’s Court.  This is especially important in the case of a minor. Should a minor be a beneficiary of your estate, the court will generally grant a guardian (guardian ad litem) to protect the minor’s interests.

A trust would avoid the time consuming and costly Surrogate’s Court process.  Your trust sets forth that your minor child is the beneficiary and you chose the trustee who will oversee and administer the trust on behalf of the minor until the trust ends (typically when the minor reaches age of majority, which is 18 in New York).  Once the trust ends, the beneficiary is responsible for managing the trust assets.

Below are some examples of how trusts may be used:

  • You may state the trust much be used for education only;
  • The trustee must invest the trust assets to accumulate income and save money for the minor until the minor reaches a certain age;
  • If the minor has special needs, the trusts may be used to specifically provide for the minor’s care. These trusts generally end when there are no more funds.
  • to get the benefits of IRS 2503(c). A 2503 Trust allows a trust for a minor child/grandchild until they reach at least 21 years of age where you would typically contribute yearly to the trust in an amount up to the IRS annual exclusion amount ($14,000 for 2016), without incurring any gift tax liability or reducing any of your applicable exclusion amount ($5,450,000 in 2016).

Proper implementation of a trust in your estate plan would not only provide for your children and/or grandchildren, but is a great way to transfer wealth and save on estate taxes.

Our firm works closely with our clients to ensure they understand the trusts for minors and the other various options available.  Our focus is to not only understand our clients’ needs and goals, but also ensuring our clients understand their estate plan and the related complex issues.  In this important process, our clients are as much involved in the drafting and implementing of their estate plan as we are.

The attorneys at James G. Dibbini & Associates, P.C. have over 20 years of experience in Wills, Trusts & Estates.

In order to learn more about how we can assist you with your Wills, Trusts and/or Estates matter, please feel free to contact us directly.