Santa Cruz Estate Attorneys on What to Know About Pot Trusts

Parents often create an estate plan to provide for the children they leave behind when they die. One common strategy that our Santa Cruz estate attorneys may use is a pot trust. Multiple beneficiaries can benefit from this estate planning tool.

A pot trust is a type of trust designating children as beneficiaries of a pool of assets. The appointed trustee of the account has the authority to determine how to spend the assets in the trust on behalf of the beneficiaries.

Advantages of a Pot Trust

A pot trust allows the grantor to create a pool of assets to be used for the benefit of their beneficiaries. If you have multiple minor children, naming each one as a beneficiary of the pot trust is possible.

The flexibility of a pot trust makes it a popular option during estate planning. You need a responsible person to manage the assets in the trust and ensure nothing goes to waste. When you create a pot trust, your assets can benefit more than one person and allow the trustee to use those assets differently.

For example, let’s say you set up a pot trust for your two teenagers. Your trustee can use the funds or an asset held in the trust to pay for one of their medical bills if there’s a car crash. The assets aren’t limited to one specific beneficiary or event.

Why You Should Consider a Pot Trust

Distributing trust assets and funds depend on a child’s needs. Instead of setting up the account for specific circumstances, such as when they turn 18 or get married, the trustee can distribute the assets for any reason they deem necessary.

A pot trust might be right for you if:

• You have two or more kids
• At least one of your children is a minor
• You want to leave your estate to your kids

The trustee can use their discretion to decide when and for what the assets should be used while the trust is in place. Typically, pot trusts terminate when the youngest beneficiary turns a specific age. At that time, the trustee can distribute the remaining assets.

The goal of the account is to ensure your children’s financial future and well-being when you’re gone. They won’t have to worry about how to pay for unexpected expenses, such as an illness or injury.

Disadvantages of a Pot Trust

One of the only issues with creating a pot trust is an unequal distribution of assets. If you name multiple kids as your beneficiaries, they likely won’t receive equal amounts of the assets. One child with ongoing medical problems will likely need a larger share of the funds than a healthy kid.

Another potential challenge of a pot trust is the trustee’s responsibilities. They essentially take on the role of a parent to decide when and if they should use assets or funds for each child. Instead of following specific conditions as they would with a different type of trust, they face the burden of these decisions themselves.

Contact our Santa Cruz Estate Attorneys 

We understand how overwhelming it can be to create an estate plan that meets your child’s needs. When you have two or more kids, you want to secure their future by leaving them with assets or money they can use to care for themselves. A pot trust gives you the option to make sure your assets can be used where they’re most needed until the youngest child reaches the age you choose.

You should contact our Santa Cruz Estate Attorneys immediately to learn more about a pot trust. An experienced estate planning attorney can review your circumstances and determine if a pot trust is right for you. To speak with an attorney at our Santa Cruz office, or at one of our various law firms located throughout the state of California, contact us at (800) 244-8814.

If you have any further questions about estate planning and strategies to shield your wealth, or if you’d like to have your current asset protection plan reviewed to make sure it still meets your needs, please contact us at one of our offices located throughout the state of California 800-244-8814 to set up a consultation.