Photo by Sharon McCutcheon on Unsplash

In preparing their will, this is a question that many people grapple with:  If my spouse and I die and our money is held in trust for our children, at what age should they have access to our money?  Is it 18 when they become “an adult,” or 21 when they can now buy alcohol, or maybe 25, presumably when they have completed all their education, or maybe hold it all the way until they are 65 – when they retire (since you know they will blow it all anyway)!

A few things to keep in mind will help you with this decision.

First, if your children are minors (i.e. below the age of 18), your will should contain what I call a “Minor's Trust” which is a provision that sets aside the amount your child stands to inherit to be overseen by a trustee.  A trustee is someone you will name in your will to perform the task of overseeing, investing and safeguarding these funds.  In the typical “Minors Trust,” while your children are minors, the money can be used for their health, education and welfare.  Whether a particular expense is related to the child's “heath, education and welfare” is a decision the trustee must made, but that is the legal standard.  Some decisions are easy – tuition for school or an uncovered medical expenses – are clearly allowable expenses.  However, other demands are not so clear.  For instance, your son needs a car for basic transportation (seems reasonable on its face), but then proceeds to tell the Trustee that he can only drive the $100,000 fire-red Ferrari he just found on Craig's list if he is to “fit-in” at his high school. Sorry, but I think the Ferrari will have to wait a few years!

Second, just because your child turns 18 and is now a “legal” adult, does not mean that the trust funds must automatically get distributed to that child.  As I alluded to above, you are free to define when the trust gets distributed outright to your children.  It could certainly be at age 18, but most parents will agree that an 18-year old getting his or her hands on several hundred thousand dollars is probably not such a good idea. Generally, I tell people that since the trust can be readily accessed for things like college or basic necessities, it is a good idea to have the trust remain in effect at least until the child turns 21, which is usually around the age when a child finishes college (at least in theory, though kids nowadays are on more of an 8-year college track)!  So, if you think your child may hang out in college or graduate school beyond his 21^st birthday, you might want the trust to remain in effect until they turn 24 or 25. That is usually what I see most people do. In making this decision, just use some common sense, in light of what you know about your particular children and how you think they will handle the amount of money they might stand to inherit.

So, until he turns 25, your son must continue to drive that beat-up 1998 Subaru (poor fellow), but on their 25^th birthday - - hooray, he can now buy that fire-red Ferrari he has always dreamed about.