|Image courtesy of photostock at FreeDigitalPhotos.net|
If a tragic accident strikes and the parents of minor children died at the same time, what will happen to the insurance money without a trust? There is a real risk in Pennsylvania the money will be deposited into a sequestered account. That means the minor children and/or their caretakers will have limited or no access to the money. Then, as soon as the minors turn 18, they will receive the entire sum. If both mom and dad had $250,000 of life insurance, the children would receive their share of the money at 18 with no controls, restrictions, or safeguards on the funds. Would you trust your 18 year-old child with $500,000?
If parents want to help guide their children financially even after they are gone, they can do it through an unfunded trust agreement. Basically, they have a trust agreement drafted to accept the proceeds of their insurance policy should their primary beneficiary (their spouse) not be alive at the time the policy pays out. The money would be paid into the trust and managed by a trustee.
The trust is a list of directions on how the money will be used for the support of the children and when they will receive control of the money itself. Parents can give the cash to them when the kids are as young as 18 or as old as they want. The money can be held in a trust until the beneficiaries turn 30 if the settlor wants.
The trustee can be another family member, someone the settlor has a relationship with, or a professional trust manager or institution like a bank. The trustee is the gatekeeper and manages the money. A simple trust can help protect a young adult from wasting money before they are ready to properly manage it.
If you want assistance, legal representation, or just want to know more about Mark M. Medvesky or Wells, Hoffman, Holloway & Medvesky LLP, check out our website at www.whhmlaw.com.
#Bucks_County #lawyer #lawyers, #MontgomeryCounty #Souderton #Law_Firm #Wills #Power-of-Attorney #Living_Will #Healthcare #Trusts