Leaving money to your kids? A trust can help protect them

If your child isn’t ready to handle money or is facing outside pressures, your estate plan can help.

03 Oct 2016
Why you should consider a trust when leaving money to your children

One of the last acts of love a parent performs is to make sure that the gift of wealth to his or her children is in the best interest of those children. Depending on the child, an outright inheritance might not be the best option. That’s where trusts come into the picture. “Trusts can help protect assets for your children, whether you’re worried about an adult child’s financial acumen or you want to shield your son’s or daughter’s inheritance from an ex-daughter-in-law or ex-son-in-law,” says Erin Wilms, Head of Advanced Planning for UBS Financial Services Inc.

Key takeaways

  • While you want to provide for your children after your death, a will may not be the best option.
  • Children who aren’t ready to handle money can benefit from a trustee’s guidance.
  • If your child is at risk for lawsuits due to previous marriages or legal troubles, a trust can help protect assets from certain types of creditors.
  • Trusts can be used to protect children from a previous marriage.
  • Talk to your Financial Advisor to see whether trusts might be useful in your estate planning, and of course, discuss these matters with your independent legal or tax adviser.

Children not ready to handle the money

Trusts can also ensure that you have a say in how assets you leave your children will be distributed, which can be helpful if they’re very young or, in your view, not ready to handle a large inheritance. According to David English, professor of law at the University of Missouri School of Law and author of numerous books on estate and financial planning, parents often give trustees discretion over how much money adult children should get, and when, or even how, the assets will be used.

You may also want to put a vacation home in trust for the kids—along with enough money to maintain it—to prevent squabbles among siblings, adds English. “Sometimes the worst way to gift property is to divide it equally among the children in your will,” he says.

This report is provided for informational and educational purposes only. Providing you with this information is not to be considered a solicitation on our part with respect to the purchase or sale of any securities, investments, strategies or products that may be mentioned. In addition, the information is current as of the date indicated and is subject to change without notice.

Neither UBS Financial Services nor its employees (including its Financial Advisors) provide tax or legal advice. You should consult with your legal counsel and/or your accountant or tax professional regarding the legal or tax implications of a particular suggestion, strategy or investment, including any estate planning strategies, before you invest or implement.

Information included in this report is obtained from sources we believe to be reliable, but it is not independently verified or guaranteed by UBS Financial Services Inc.

Important information about Advisory & Brokerage Services
As a firm providing wealth management services to clients, UBS Financial Services Inc. offers both investment advisory and brokerage services. These services are separate and distinct, differ in material ways and are governed by different laws and separate contracts. It is important that clients understand the ways in which we conduct business and that they carefully read the agreements and disclosures that we provide to them about the products or services we offer. For more information on the distinctions between our brokerage and investment advisory services, please speak with your Financial Advisor or visit our website at ubs.com/workingwithus.

©UBS 2016. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. UBS Financial Services Inc. is a subsidiary of UBS AG. Member FINRA/SIPC.