Henry is a father of a young daughter named Hannah. Hannah is currently 15 years old, but Henry is already thinking about her future. Henry has some money that he wants to put away for Hannah but doesn’t want her to have access to it until her brain is really developed and when she is out of college. Henry doesn’t think Hannah is irresponsible; Henry just wants to ensure that she is set up nicely so she can start her life on a good note. He isn’t sure how to make this happen, so he talks to his attorney.
His attorney, Peyton, says it sounds like he needs a Living Trust. Peyton tells Henry that trust will allow him to decide when Hannah can receive the money. If Henry does nothing and passes away unexpectedly, Hannah will receive the money at 18 – not what Henry wants.
Peyton tells Henry that trust will give the peace of mind to make sure that Hannah is taken care of and can even have the money distributed to her at different times of her life. Henry thinks this is wonderful, so he decides to let her have the first half of the money at age 25 and the second half at age 35. Peyton explains that even though Hannah won’t have full access to the funds until she reaches the age of 25, there are ways that she can get money for necessities. If she needs money to afford things like education, medical treatment, and support and maintenance. Support and maintenance can include housing, vehicle, and food or clothing. He will have to set up the money in an account, name the trust, put the disbursement instructions in writing, name a trustee, and then get the paperwork notarized.
Henry wants to keep the process as simple as he can, so Peyton shows him an example of a short and sweet trust. “I, Henry, set up this trust named ‘Hannah’s Trust’’. I will appoint Henry (myself) as trustee, and will hold the account named ‘Hannah’s Trust’’ for 10 years, which will then disburse half of the amount to Hannah. Then after another 10 years the rest of the trust will be disbursed to Hannah.” Peyton also says that they can write up a trust with as much detail as he wants if the simple paragraph isn’t enough.
Peyton tells Henry about the options for who can be appointed as trustees: Henry himself, a trusted family member or friend, or a bank. If Henry appoints a bank as the trustee, a fee will come along with keeping the trust safe.
Peyton also tells Henry of the other benefits of keeping Hannah’s inheritance in a trust. These benefits include keeping the money safe from any claims filed by others. This would consist of a future spouse trying to claim the money or if she were to get sued. Having the money in a trust will stop anyone from being able to go after it. Peyton also says that starting this trust can help his future grandchildren. Henry can set the trust up so that if Hannah were to die, the leftover money would be kept for his grandchildren when they age. This is designed to allow the funds to pass to his grandchildren without the inheritance or estate tax and add to the burden of what would be an unexpected and horrible time for his family.
Peyton tells Henry that the trust is designed to let him control how his money is distributed to his daughter. He can make it as rigid or as flexible as he wants. This trust is designed to help his daughter out when she starts her life, so he will want to protect it in any way he can. Henry is happy to have found a solution that will help him take care of Hannah and ensure that she is taken care of in the future. He knows this trust will give him the peace of mind to know that she will be provided for and that his money will go where he wants it to go.