Idaho Law Blog
In my estate planning practice I am often helping individuals make plans for providing and protecting their minor children. Often though, I am working with older individuals whose children are all adults. In this circumstance my clients often feel that their estate planning is much more simplified. However, when there are grandchildren involved things may not be as simple as they seem.
Sometimes a client asks questions about distributions if their child predeceases them. In this circumstance the client has usually stated in their Last Will and Testament that when a child predeceases them, that child’s share will go to the surviving children of the deceased child, or to my client’s grandchildren. Unless the client’s estate planning is specific and states otherwise, the grandchildren will automatically receive those assets at age 18. This is true because and Idaho a person is considered an adult at the age of 18.
The trouble with this scenario is that most 18 year olds are not mature enough to handle real estate, or large gifts of cash or other valuable assets. For this reason, We always recommend the use of a testamentary trust within your last will and testament.
Through a testamentary trust you have the ability of controlling the age at which distributions will be made to any person whether they are your child or grandchildren or any other person. For example, rather than giving a distribution outrightly to a person at the age of 18, when the law would consider them to be an adult, you have the ability to control when distributions are made. Often my clients will designate a specific age where some portion of the assets will be distributed. This age is usually at a time when they feel like this distribution would be helpful and won’t cause problems for the recipient. I often recommend the age of 25 For the first distribution. Then my clients will stagger the ages at say 35, and 40 for the remaining distributions.
There is no magic to the ages that are chosen for distributions, it is just when my clients feels that the money would be most useful and cause the least amount of problems for the person it is being left to.
My clients often ask what happens with the money in the meantime, while it is being held prior to distribution. Through the testamentary trust a trustee is appointed who can make distributions on behalf of the child. In other words if a person were going to college and needed some of the money that was being held in trust to pay for college the trustee could make a tuition payment directly to the college and not give the money to the person individually. In this way the benefit of the money is still received without giving the cash directly to the recipient who may not be mature enough to handle it directly.
If you have questions about leaving gifts or assets to a minor, we can help. Call us toll free at 877-232-6101 or 208-232-6101 for a consultation with Lane Erickson and the Racine Olson team of Estate Planning attorneys in Idaho. You can also email Lane Erickson directly at lve@racinelaw.net. We will answer your Idaho Estate Planning questions and will help you solve your Idaho Estate Planning problems.
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