Raising grandchildren — the benefits of a trust
If you are one in the nearly 40,000 Arkansas grandparents raising grandchildren, now is the time to plan and secure their inheritance.
While the children are under age 18, if you give them money, their parents could gain control of the money. The best way to handle distributions to minors is with a trust.
A trust allows you to select who will make decisions about the investing and spending of the trust assets. Trusts allow you to continue to encourage your grandchildren to great things. For example, bonus distributions of trust assets could be made upon completion of graduate school or earning a Pulitzer Prize.
Trusts allow you to teach your grandchildren about helping others. Allocate some of your trust for charitable giving and your grandchild can select the charities.
Trusts avoid probate. The trustee transfers trust assets at your death according to the terms of the trust and without the involvement of a court.
Trusts are private. Trusts do not need to be recorded. They are not public documents. No one is involved in how your family is managed.
Trusts are difficult for your children to break or control. In Arkansas if your children are not beneficiaries of your trust, they are not entitled to a copy of the trust. Without a copy, it is difficult to challenge the terms of the trust.
Trusts benefit only the beneficiaries; no one can force a distribution.
Trusts are more flexible than annuities. If assets are left to a beneficiary in an annuity, often the beneficiary can choose to take the funds early and pay a penalty. If the annuity is irrevocable, most of the funds will be unavailable to the beneficiary if there is an emergency. Trusts can address both situations.
It is your money. Make sure that it goes where it is needed to care for your grandchildren.