At what age should assets from a Trust be distributed to minors?
When preparing Trusts for the distribution of assets to minor grandchildren, I have been asked what age should money in the trust be distributed to the grandchildren.
That depends upon how mature your grandchildren are at the time of distribution, how much money will be distributed to each of them, and whether they can appropriately manage their finances.
If your grandchildren are older at the time you create the Trust for themin your Will or Revocable Living Trust, you may be better equipped to evaluate whether they canappropriately manage money, and candetermine at what age or ages Trust funds should be distributed to them. To ensure that each grandchild is distributed an equal amount of your assets, if that is your intent, the Trustcould provide that upon your death, your assets are divided into a sufficient number of equal shares so that each grandchild gets one equal share of your assets which will be held for them in trust.
Generally such a Trustgrants the Trustee the authority to distribute assets from eachgrandchild’s Trust to pay for their health, education, maintenance, and support, and if you wish to grant your grandchildren an absolute right to receive additional portions of their Trust assets, you can also specify in the Trust at what age or ages, they have a right to receive such assets. Generally, Trustsgrant a beneficiary the right to receive 1/3 of their Trust assets when they reach the age of twenty-one, and ½ of the assets when they attain twenty-five years of age, and the remaining assets at age thirty. The foregoing distribution timetable, however is not fixed in stone and varies based upon the maturity level of beneficiaries, and their individual circumstances. For example, a Trust can provide that such portions of the Trust assets are not distributed to the beneficiaries unless they request such distribution, so that if distribution to them as directed would be detrimental given their circumstances, the beneficiary could decide not to request that the distribution be made.
Other options would be to create a Trust whereby the beneficiary is not given any right to receive distributions of Trust assets, and will only have such assets distributed to them when they reach a certain age. You could also include incentives in the Trust which provide that Trust assets will be distributed if a beneficiary graduates from college.
As you can see, a number of factors need to be considered when choosing the appropriate age for Trust assets to be distributed to your grandchildren.
Published in the 2011 winter issue of “Outlook By The Bay” (January 22, 2012).