Is Your Child Ready To Access Their Trust?

Trusts are a great way to leave money to your children that can help them lead a safe and comfortable adult life. Additionally, many parents find this to be the easiest way to manage their estate, because trusts allow you to legally avoid probate and other estate regulations. If you’ve created a trust for your child when they were very young, they will be able to access it once they’ve reached a certain age, depending on the conditions of the document. It can be difficult to know when you initially set up the trust fund whether or not you child will be able to effectively handle the money once they are old enough to access it. In this article, we’ll talk about how to know if your child is ready for their trust, and what you can do to help them if they need to learn a little more about financial responsibility.

Before your child gets access to their trust, observe the way they manage and spend money on their own. Even if they don’t have a full-time job or salary, they likely will still have some source of income, whether that be a part-time job or even an allowance from you as their parent. Keep an eye on the way your child makes purchases – do they spend all their money right when they get it, or do they plan out how they are going to use it? If your child can effectively plan how to spend their money, they are likely ready to access their trust.

You’ll also need to consider your child’s priorities and what they might spend the money on. In many cases, the trust will designate a specific purpose for the money, but in other instances, the money is available at the child’s discretion. Ideally, your child should be at a point in their life where they can use the money for career development, education, or important life expenses (such as a home or a car). If you believe they may use it for recreational or social purposes, or even to gain access to illegal items, then you’ll want to help provide them with more financial education before they access the trust.

If you feel your child isn’t quite ready to manage large sums of money, there are things you can do to make this transition easier. The first is to educate your child about finances by walking them through the basics of budgeting, taxes, investment, and other financial planning concepts. You can even help them by showing them resources to use, such as budgeting apps or computer programs that make it easier to manage their money.

Another step is to have the trustee talk with the current owner of the trust before the money is release to them. When the trust is initially created, it will need to be signed over to someone who manages it until it is transferred to the child, usually a bank or financial manager. By having your child meet with their trust’s current manager, they might gain a better understanding of the seriousness of this financial responsibility. The trust manager can also explain to the child what is expected of them when the money is transferred to them. Hearing this from someone who is not a parent can often be the best way to impose upon them the seriousness of the situation.

Although it can be scary to finally hand over a trust to your child, you can make sure they manage it appropriately with some preparation. Once the money has been transferred, you will be able to rest easy knowing that your child will have a safety net in the event of an emergency, and that they will be able to live comfortably throughout their adult life.