I am often asked the question, “Should I tell my kids that I am leaving their inheritance in a trust?” and, as a typical attorney, my answer is, “it depends”.
Many parents are reluctant to discuss the fact they are creating a trust with their children. There are some good reasons why you may not want to discuss trust creation with your children. If your children are young, for example, they likely will not understand how trusts work or why a trust is needed. If you don’t think your young children would understand or if you are worried about your kids getting upset, there is little reason to discuss trust creation with them.
However, if you are making a trust for older children, and especially if you are creating a trust for the transfer of assets to adult children, it can be helpful to have a conversation with your children. Your children will need to know what assets you own and how the ownership of those assets is structured so they will understand what must occur after your death. If you are creating a simple trust just to protect your assets and to facilitate the transfer of your wealth to your kids more quickly outside of the probate process, your children may be very happy and grateful you’re creating a trust. They may also be happy if you create a trust to try to avoid estate tax so you can transfer more wealth to them.
If the purpose of your trust is to restrict what your children can do with their inheritance or to impose conditions on an inheritance, your children may be less happy to hear about the trust. While you may be worried about family fighting or pressure from your kids not to structure the trust in the way you see fit, you can at least explain your reasoning to them if you talk with them about why you are creating a trust as you go through the process.
The attorneys at Sinclair Prosser Gasior are here to help you with all of the decisions you need to make during the trust creation process. We can explain all of the legal and financial implications of creating a trust. We can also advise you on some key things to consider when you decide whether to talk with your children about creating a trust or not.