If you are considering setting up a fund for your children – it may seem like a confusing process but you don’t have to do it alone. There are various options when deciding how to leave money to a minor like living Trusts. As minors can’t own investments outright, it is important to choose an option that best fits your intentions. At Siegel Law Group, P.A., we help you understand your options and choose the best one.
Let’s talk about UGMA and UTMA
UGMA is a Uniform Gift to Minors while a UTMA is a Uniform Transfers to Minors. The greatest distinction between these custodial accounts is UGMA will terminate when the minor reaches 18 years old, and UTMA will last until the minor reaches 21 years old. These accounts are primarily used by parents and grandparents. This may be a good option for you when leaving a minor a modest sum.
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Should You Use a Trust and If So, What Kind
There are various Trusts that you can choose from. Each has unique properties that you may want to consider when selecting a trust. If you want to specify what the money will be used for, you may consider using a trust. Many have done just this and set up a living trust. This is a small list of other Trusts you may want to consider:
- Living Trusts
- Gifting Trusts
- Irrevocable Trusts
- Life insurance Trusts
- Charitable Trusts
It may be hard to understand which trust is best for you. We work with you, step by step, and help you understand which option may be most beneficial for you.
Deciding between UGMA and UTMA, or a Trust
Trusts are usually recommended by professionals. One reason that professionals prefer a trust over UGMA or UTMA as Trusts allow you to extend the date of distribution. While UGMA and UTMA are limited to 18 and 21, Trusts are not.
When appointing a trustee, it may not be wise to leave it in the hands of grandparents as they may already be older in age and are more prone to health issues. Each circumstance is different but you may want to consider Aunts and Uncles. Age would be less of an issue and they are more likely to be able-bodied. This is important as a trustee must review the rules of the trust and make decisions in the best interest of the minor.
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Let Us Help
We know this is an important, and stressful part of making financial plans and backup plans.
Here at Siegel Law Group, P.A., we want to help you through the process and resolve any difficulties you may be experiencing. We know this may be an emotional time for you which is why you can count on us to understand and provide the right structure for your situation. For more information about your first free consultation, you can visit our website.
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