This is the third part in a series of blog posts that compare wills and trusts in the following areas: 1. Cost, 2. Post-Death Process, 3. Getting Money to Minors, 4. Maintenance, 5. Family Situation, 6. Taxes, 7. Asset Protection, 8. Later Acquired Assets.

‍Pt. 3 Getting Money to Minors

Many clients have heard that because they have minor children, they need a trust.  While it is true that a trust is the best way to get money to minor children, this does NOT necessarily mean that they need a revocable trust. Stick with me here, folks!

Both wills and trusts can… should… aught to… have sub-trusts embedded in them for the benefit of minor children. In fact, any revocable trust that has a provision setting up a trust for a child after you die is the same type of sub-trust that would appear in any will. They both fall into the category of “testamentary trusts”.

‍A testamentary trust simply put is a trust that comes into existence after you die. The triggering event for its existence is your dying, and these can and are incorporated into both wills and revocable trusts. 

The will and/or the revocable trust simply serves as the vehicle for how your assets are coming to those testamentary trusts. Make sense? 

So when clients say, they have minor children so they need a revocable trust…what they mean is they need a testamentary trust and having a revocable trust does not guarantee that you will have a testamentary trust for your minor children nor does having a will mean that you can’t have a testamentary trust for your minor children. So the key is the testamentary trust not the vehicle of delivery i.e. revocable trust or will. 

Revocable trusts, if properly funded at death, can edge out wills in the Post-Death Process time and get those testamentary trusts funded more quickly, but this is not a guarantee, and probate has some built in mechanisms to ensure that minor kids have estate funds to pay for their needs even while other assets are still being sorted out. So, again, neither is a clear winner on this front. 

‍Winner: It’s a tie! (So long as the documents include a testamentary trust for the benefit of the minor children.)