Proper estate planning is crucial for every person no matter how big or small your estate is. After news spread of the tragic passing of famed actor Robin Williams, we also learned that Williams planned ahead with a trust for his children. According to TMZ, Williams enacted a trust where each of his three children would receive a third of the trust fund upon reaching a certain age, and it was not dependent on his death. Reportedly, he did this in an effort to not spoil them at a young age.
Trusts are a very common estate planning technique for parents to do for their children while they are minors or even when they are adults. I often hear clients’ concerns about their college age child or young adult child who simply is not mature or responsible enough to handle a large sum of money all at once. They fear it would be de-motivational and the child would blow the money and/or stop working, quit school, have lavish parties, etc. Another concern is that the child is married to someone who the parent(s) do not want to end up with their hard earned money in a divorce or the money could end up going to the child’s creditors. Trusts are often the answer for protecting your child from themselves.
It appears that Williams had a revocable living trust. In Pennsylvania, any property or assets held in a revocable living trust avoids the probate process, avoids the decedent’s creditors and tends to be easier to administer. In Williams’ case, his adult children would get their shares even while he was alive. This is a bit unusual in my experience, as most clients do not want to part with large chunks of their money during their lifetime because they may need it. On the other hand, Williams presumably had a lot more money in his estate than the common person.
Minor’s trusts can be a part of a revocable living trust or a will and is essential when the goal is to give your estate to your minor children upon a parent’s death. In PA, if the child has not reached the age of majority, the funds can be used by the trustee for their health, education, maintenance and support. This is a relief for parents who worry about the welfare of their minor child after the parent has passed. After the child reaches majority, the parent can dictate, through the trust, how much principal of the trust the child can receive and at what age. In my experience, people like to spread out those disbursements. One common scheme is to give 25% at age 25, 25% at age 30 and the rest at age 35. However, there is not a one size fits all approach. Each parent knows their child best, has unique values and thoughts on money.
If you need a review of your estate plan or your estate planning documents drafted for the first time, please call the experienced estate planning attorneys at McMorrow Law, LLC at 724-940-0100.