Setting Up Grandchildren Trusts

The only thing worse than giving a large sum of money to a 14-year-old child is giving a large sum of money to an 18-year-old adult. Think motorcycles and Las Vegas. Yet this is exactly what can happen without proper estate planning.

When setting up trusts for grandchildren, it’s important to protect assets not only from predators who might want to get at the money but also from the beneficiaries themselves. At Morris Hall, PLLC, we create trusts that offer a level of protection that almost no other firm provides. All of our trusts include beneficiary subtrusts. When assets are placed in a beneficiary trust, your beneficiaries can use the money for the uses you designate, but nobody else can touch it.

Unfortunately, most trust assets are simply distributed outright to beneficiaries upon the death of the trustee or in gradual stages thereafter. Once distributed, the assets have no more protection than if you had written your grandchild a check.

By keeping the assets in a beneficiary trust:

• Assets in the trust are protected from creditors, bankruptcy, ex-spouses, spend-down provisions for long-term care, and anyone who would want to separate your grandchild from his or her inheritance.
• Our lawyers can draft special provisions to determine how assets are used. For example, you can limit how much money can be taken out each year, specify that money is used for college, or create incentives to encourage your grandchild to reach certain goals.
• If you leave money to grandchildren, you must be very careful to avoid generation-skipping transfer taxes. You will need the advice of the most experienced estate planning attorneys to keep the money with your grandchildren, and not open it up to the government.

Gifting and Grandchildren Trusts

Our attorneys will advise you about ways you can fund a grandchildren’s trust without creating gift tax consequences. Married couples can give up to $26,000 to any individual per year without creating a gift tax consequence. You can also fund the trust with 529 accounts, which could be owned by the trust.

Morris Hall offers a full range of legal planning, documents and strategies for giving you the confidence that your assets and your grandchildren are protected now and after your death. Our offices are located in Phoenix, Tucson, Albuquerque and communities throughout Arizona and New Mexico. Contact us to arrange a consultation with an experienced lawyer today.