How to Best Pass Assets to Your Children

by Bruce Givner on April 7, 2015

In their estate plan some parents want their children to get the assets, after both parents are gone, immediately.  Other parents want to have the assets held in a perpetual trust for the maximum estate tax and creditor protection.  The vast majority of parents decide on a variation of "birthday" clauses, e.g., 1/3rd at ages 25, 30 and 35.

There is an "in-between" approach referred to as a beneficiary controlled trust.  This format provides for the assets to be held in perpetual trust for the child, but for the child to have these powers: (i) the child can, at any time, remove the trustee and name a new one; and (ii) the trust's assets must be contributed to a single member LLC of which the child is the non-member manager.  This structure can be created in a manner which is either more, or less, restrictive.  If the parents want more control, then the trustee can be a large corporate trustee, and if the child removes the trustee the child can only name another large corporate trustee.  On the other hand, if the parents want the structure to be less restrictive, they can allow the child to name anyone as trustee.

If you wish to discuss an alternative format for distribution to your heirs, please give us a call.  This is only one of many formats worth considering.

Leave a Comment

Previous post:

Next post: