Trust Funds For Minors: Any limit on restrictions?
by Sam Ott, BOL Guru
QUESTION: I've heard that when parents set up a trust fund for their minor children, they can designate any age they want for the child to be able to access the account. I heard about one where the child couldn't get to the account until he's 35. Is this true? If it is, it seems like a grevious violation of the child's rights!
ANSWER: The grantor (the party that establishes a trust) can specify the conditions under which the trustee is authorized to make payments to a beneficiary. If the grantor in this case provides the funds in the account are not to be distributed until the beneficiary reaches age 35, it would be no different than the grantor restricting the funds for the medical or educational expenses of the beneficiary. In addition,unless the trust is designated as a irrevocable trust when it was established, the grantor can amend or revoke the trust at any time during his or her lifetime. On the other hand if the trust account is established under the Uniform Gifts to Minors Act or the Uniforn Transfer to Minors Act, the trust is irrevocable, the minor is deemed the owner of the account and gains full control of the account upon reaching the age of majority (18 or 21 depending on state law).
First published on BankersOnline.com 12/3/01