If you’re the parent of young children, your estate plan serves a special purpose. With it, you designate a guardian who will take care of your children if they’re orphaned before they reach adulthood, and you make a plan to provide financially for your kids if you pass away.
How it Works
When it comes to providing for your children, one option is a Family Pot Trust. This is a single trust that you establish for all of your children to share. The reason that it’s called a Pot Trust is that, instead of establishing a separate trust for each child, your family assets are put in a “pot” for the use of all your minor children. The trustee then has discretion over how the trust funds will be spent.
With a Pot Trust, the funds don’t have to be divided equally among your children, and the trustee can decide to spend more on one child than on another. This can be a huge benefit if you have one child with unique medical needs, or with special educational needs. The flexibility offered to your trustee can also be a drawback – he or she might have to make tough choices about spending more to meet the needs of one child. And, this unequal treatment might be seen as unfair by your other children.
When it Ends
Because the purpose of a Family Pot Trust is to provide for all your children while they’re still children, the trust doesn’t generally end until your youngest child reaches legal adulthood.
If you have young children, you might want to ask your estate planning attorney whether a Family Pot Trust is right for you.