The legal age of adulthood in Tennessee is 18 years old. However, if you are like many parents, you probably understand that your child will not magically become mature and capable at the age. In fact, when it comes to leaving your child a sizable inheritance, the idea of him or her getting all the money at once when he or she turns 18 could send chills up your spine. It is way too easy for someone that young to make bad financial decisions. To protect your child from him or herself, you may want to create a trust with age provisions.
Forbes explains that using age provisions gives you more control over what happens with an inheritance while also allowing you to protect your child’s future. There are three types of provisions you may use.
Event-driven provisions require something to happen to release money from the trust. A good example would be requiring your child to graduate from college to get the money in the trust. The downside to this type of provision is that sometimes unforeseen issues may prevent an event from occurring. This could leave your child without access to the trust finds for his or her whole life.
The other provision options are mandatory and discretionary. Mandatory means there are set points in time when the trustee may release money from the trust to your child. For example, you may release 25% of the trust funds at age 21, 50% at age 30 and the remaining funds at age 40.
Discretionary means the trustee has some power over when to release funds. This can allow for emergency situations where the trustee may give your child money for an immediate and urgent need. To avoid issues with your child trying to talk the trustee into releasing money, you should set standard for discretionary distributions. This information is for education and is not legal advice.