Florida parents create trusts for their children for a number of reasons, including the added assurance that money in a trust is very likely to reach the children without the complications of probate. Still, some parents have additional concerns that cannot be satisfied with a simple trust. This is why some parents create a lifetime trust for their children.
As explained by Forbes, some parents do not feel comfortable handing out money all at once to their children. A lifetime trust allows parents to hold money within the trust for as long as their children live. The trustee who oversees the trust dispenses amounts of money from the trust according to certain guidelines, but the child does not have a blanket right to withdraw money at any time.
There are a number of reasons why some parents decide a lifetime trust is the right choice. Sometimes it comes down to problems their children have with spending. Some children have gambling issues and would likely waste the money if it was given to them in one sum. In other cases, adult children may be financially responsible but still lack experience with handling large amounts of money and might spend their money on expenses that are not wise at the moment.
Sometimes adult children need greater protection for their assets. A child who is in a profession that is at high risk for litigation could lose a lot of money in a civil lawsuit. Maintaining that money in a trust could keep it out of the reach of creditors. A lifetime trust also offers better protection from divorce settlements. Giving money directly to a child could risk that money turning into marital property. If the child gets divorced, some of the money will likely end up in the hands of the ex-spouse.
Florida parents will probably have a number of important issues to think about, such as who may serve as a trustee, if a lifetime trust is on the table. Because the needs of Florida families vary, only consider this article as general information and not as legal advice for your situation.