There are many types of trusts that can be used depending on an individual's circumstances and family dynamics. Even so, the most popular type of trust used by people here in Massachusetts and elsewhere is the revocable trust. This is because the grantor can make changes to the trust during his or her lifetime.
Only after death does a revocable trust become unchangeable, or irrevocable. A will can appoint a guardian for children in the event that both parents die. A trust can provide for that child until adulthood and beyond.
A Massachusetts parent does not need to have a significant amount of assets to create a trust benefiting a child or children. Taking on responsibility for someone else's child is a tremendous gift to a parent. However, if the parents provided for at least a portion of that child's support, that is a gift to the guardian.
It is also possible to control how the assets are distributed both while the child is a minor and after it reaches adulthood. For instance, distributions could be made for specific expenses that relate to the child. Once the child reaches the age of majority, the assets can be distributed however the parent desires. Inheriting a large sum of money and/or assets too soon might not be best for a young adult.
A revocable trust is an estate planning tool that provides parents with a way to continue to take care of their children even after death. After all, this is one of the main goals of estate planning for many people. Creating an estate plan could give surviving family members the peace of mind that arrangements have been made ahead of time.
Source: wisebread.com, "Should You Set Up a Trust for Your Child?", Matt Bell, Feb. 25, 2016