Most people are familiar with how a Will or Trust usually provides for children’s inheritance. After parents pass, things are typically divided up equally between children into separate shares. But this may end up not being “fair” or not being exactly what you intended.
Instead, another way to pass on children’s inheritance is to use something called a Common Pot Trust. Basically, instead of everything being divided into shares right away upon both parents’ passing, it is held in trust jointly for all the beneficiaries. This allows for flexibility, in case one child has greater financial needs than another.
This is typically beneficial where there are still young beneficiaries within a family.
It is important to weigh the advantages and disadvantages of a common pot trust and determine if this is right for you and your family. While it is true that there are many benefits, such as making sure younger children receive the same financial benefits older children received during your lifetime, there are also some concerns to work through. For example, it does not guarantee a truly equal distribution of assets among your children, and it might burden the Trustee with difficult decision-making as to what is “fair.”
If you are interested in a common pot, or other common strategies of estate planning for young families, be sure to set a consultation with us at Sinclair Prosser Gasior to review your options.
For more information, please join us for an upcoming FREE seminar. If you have questions or concerns about your estate plan, contact the experienced estate planning attorneys at Sinclair Prosser Gasior by calling (410) 573-4818 to schedule an appointment.
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