Sample Letter to the Trustee of a Child's Trust

Sample Letter to the Trustee of a Child's Trust

By Melinda Gustafson Gervasi

October 22, 2021

Today I dip into my own files to share the sample letter I give to all of my clients who have opted to create a testamentary trust for their children.  What is a testamentary trust?  It is a will that allows a parent to appoint the Personal Representative (known as an Executor in other states), a Guardian for a minor child, distribute their probate assets, and includes the recipe for a trust to be created if both parents die.   This is a way to transfer your assets into a trust if you die, managed by a trustworthy trustee you appoint, until an age you set for the children to reach before taking control of the money themselves.  Children can request funds from the trustee for expenses, but the trust has to agree to the expenditure.  Providing guidance to that trustee on what you think should be paid for is crucial when making this trust the most useful if you die before your children are old enough to manage the funds on their own.  

Sample Letter to the Trustee

Providing additional information on your wishes for how trust monies should be used in the event the trustee is appointed by the court upon your death is an excellent way to enhance your estate plan. While advisory only, additional information on your intentions may reduce emotional stress and financial expenses if and when the trust is implemented.  Topics to consider include, but are not limited to:

    • Investment – preferences on what assets are liquidated or not, what should happen to the family home, use of “target date funds”.

    • Use of funds if there are multiple children – will younger children require more funds because certain events have not yet occurred for the younger child, but have occurred for an older child.  For example, a 16 year old may need full assistance for college tuition, but their 23 year old sibling has finished school and has already received financial assistance from the parents. 

    • Daily Lifestyle – provide a list of daily activities you feel are important to be paid for from the trust.  For example, paying for the family pet(s), providing cell phone service to a child, or funding private lessons for a child’s hobbies / interests.

    • Education – discuss how you wish the funds to be used to support education: tuition, tutors, test prep, computer purchases, etc. 

    • Travel – discuss if and how trust monies should be used to pay for a child to travel and/or to pay for relatives to travel to visit a child.  Think about what “travel” means – is a day trip to the Magnificent Mile in Chicago or a night in the Wisconsin Dells “travel”?

    • Family traditions and values – mention any family traditions or values that the trust monies should support.  For example, is attending a religious or secular summer camp an annual occurrence you wish to be continued?

    • Holidays and gifts.  How, if at all, should trust monies be used to celebrate holidays, birthdays and gifts.  Are there specific items you desire a child receive upon reaching a certain age or life milestone.  

    • Milestones – would you want certain milestones to be celebrated with purchases, such as a car at 16, paying for all or parts of a wedding, providing a down payment on a first home, or funding a business start-up.

    • Restrictions – what, if anything, should trust funds NOT be spent on.  Keep in mind other sources of money your child(ren) may have if you have passed away (Social Security Survivor benefits, provision by your former spouse, a trust established by another family member such as a grandparent).

 

The author's children back when she was still taller than her kids. 
M. Gustafson Gervsi 2021

5 Overlooked Items To Include With Your Estate Plan

5 Overlooked Items to Include with your Estate Plan

By Melinda Gustafson Gervasi

October 11, 2021

Estate planning is the act of taking control of paperwork related to illness, death and taxes.  The obvious documents include things such as a power of attorney for health care, durable power of attorney for finances, beneficiary forms, a will, and sometimes a trust.  If you are looking to have an well organized plan that offers easy access to documents to ease the burden of your final affairs on your loved ones, consider including the following with these otherwise obvious documents:

1. Copy of your state and federal income taxes for the past 3 - 5 years.  The include information on your accountant and assets that generated a loss or gain that may not otherwise be found;
2. Deed to your home, cabin, or other real estate.  The deed will be needed at some point during the handling for your affairs, and finding it now allows you to review the wording to confirm it says what you think it says.  For example, is the cabin you inherited from your mom in your name or your name at that of your spouse?  That wording may or may not cause problems for your surviving spouse;
3. Copies of your health, disability, life, and burial insurance.  Having copies of these documents provides the person/entity handling your estate with documentation of what your policies did and did not cover;
4. Instructions on personal possessions that may not be of obvious value to your loved ones.  For example, my husband is a hardware electronics engineer with an entire work area full of gadgets.  I've paid enough attention to know some of those instruments can be worth tens-of-thousands of dollar.  Yet, I know that if I were grieving his untimely death I may not have enough mental recall to know which ones were and were not worth any significant value.  What possessions might you have that would be worth the time and effort to liquidate but not be obvious?
5. Copies of beneficiary forms for your retirement and other investment accounts. Beneficiary forms are essentially a contract between you, the owner, and the company that holds and manages your asset, stating where it will go upon your death.  When you maintain a copy of the form there is proof in your records of where you designated the asset to pass upon your death.  When you fail to maintain a copy of the form, you are leaving it up to the company to document its existence.  Mistakes can and do happen.  One too many times I have seen a loved one struggle with the fact a beneficiary form for a life insurance policy cannot be found and it is distributed in a manner that contradicts what the loved one had been told.  

Image by M. Gustafson Gervasi, 2021

Thank you for reading.  Remember that a blog is not legal advice, but rather a tool to spark discussion and conversation.  Please seek legal counsel from an attorney in your state of residence for advice specific to your situation. 

16 Lessons Learned: Estate Planning & Probate Practice

16 Lessons Learned: Estate Planning & Probate Practice

By Melinda Gustafson Gervasi

October 1, 2021

Today my practice is old enough to have its own driver's license -- #16!  Since 2005 I have been fortunate to counsel clients in my hometown of Madison, Wisconsin on issues related to estate planning and probate.  Today I pause to share 16 lessons I have learned while navigating my practice:

1. People often need a push to make the call to get on an attorney's calendar to complete an estate plan.  International travel and the arrival of a baby used to be the biggest nudges, then COVID 19 arrived to spur record numbers of people to take action and make a plan;
2. It is immensely easier to make decisions about who will do what and where assets will go when you are NOT also dealing with a severe illness.  Don't wait to plan until you have a stage 4 cancer diagnosis.  Sadly, it is the number one thing to prompt clients to call;
3. The type of estate planning vehicle (will versus trust) is less important than who you put in charge to handle your final affairs.  If that person is not the right person for the job it will be a mess no matter if you funded a trust or used a simple will;
4. Organized paperwork is a huge gift to leave your loved ones -- the greater the mess, the more they'll stress;
5. People think they know where their documents are until they need them.  Double check today to avoid a crisis in the middle of a crisis;
6. No one will be the perfect fit to raise your children if you die, but having no plan is far worse.  Aim for 85% in terms of a good fit and nominate that person(s);
7. We cannot really know how a person will  handle functioning as a health care agent or personal representative until we observe them acting on another's behalf.  You can always amend your plan if that person no longer seems to be a good fit.
8. Grief exacerbates family tensions.  There are two sisters out there who will never speak to one another again because of an armoire. But it really isn't about the armoire, it is about so much more that was never really faced;
9. Estate planning is about taking control of the "who" and "what", but not the "when";
10. Do not wait to travel until you retire. Tomorrow is not guaranteed;
11. We no longer memorize out loved ones phone numbers.  Write them down so they can be accessed when they are most urgently needed;
12. Family cabins and farms are not just pieces of land, they are a family member.  Plan accordingly;
13. You can lead a horse to water but not make it drink.  Sometimes you need to let the chips fall where they may and then get to work.  In other words, you cannot compel your loved ones to do an estate plan;
14. Leaving all of your assets to your "responsible" child who will "take care of the others" is a horrible idea, and one that may cause that responsible child a lot in gift taxes;
15. Laws related to estate planning and probate and state specific, unlike immigration, a federal law, that is the same from Maine to California.  Most people are not aware that what their sister in Maryland wrote may not be appropriate for one living in Wisconsin; and
16. People are compelled to use the same estate planning documents as their parents and grandparents even though their lives are drastically different. 

Bonus #17 -- In Door County, Wis there is a white fish known as the "Poor Man's Lobster" or Lawyer.  This sign is from Oct. 2009 when my family enjoyed a few days in the lovely area of my home state. 

Thank you for reading.  Remember that a blog is not legal advice, but rather a vehicle to spark thought and discussion.  Please consult an attorney in your state of residence for legal advice specific to your situation.