Establishing trusts for children

| Feb 7, 2019 | Trusts |

Looking out for their children’s best interests, many parents in Pennsylvania put a sizeable amount of money in a trust that will provide for generations to come. However, these same parents may elect to keep the existence of this trust hidden from their children till they grow up. Parents who choose to do this are trying to keep their children from becoming too spoilt or wasting their time pursuing frivolous goals.

That being said, several parents across the country might not have the choice of whether to keep the trust a secret from their children or not because state laws might dictate otherwise. Simply put, state laws govern trusts as well as the duties of the trustee, and seeing as 31 states have adopted the Uniform Trust Code, trustees in those states must follow that code. The Uniform Trust Code tries to protect the beneficiaries of a trust by dictating that a trustee must keep them reasonably informed about the trust. This information usually comes in the form of an annual accounting statement along with a copy of the trust agreement upon request.

Fortunately, the majority of states permit parents to keep the information concerning the trust restricted from their children to some degree. For instance, parents can keep the information restricted until the children reach the age of 25 according to some states. On the other hand, they can create a trust agreement that waives the trustee’s obligation to keep the beneficiary informed. Alternatively, parents, who are also the trust settlors, can choose a third party to be the recipient of the information in the children’s stead.

The bottom line is that state laws will dictate to what degree parents can shield their children from information that may cause them to grow lethargic and complacent. So, parents who would like to establish a trust for their children might benefit from reaching out to a professional attorney who might help them figure out how to best proceed and whether it would be more advantageous to create a trust in a different state.