When Does the Common Trust End and What Happens Then?

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Most common trusts are designed to terminate when the youngest child reaches a certain age or completes college. At that time, the funds that are left in the trust are divided among all the children, equally or unequally, according to the trust instructions. Instead of outright distributions at that time, you may specify that the funds will pass from the common trust into an individual trust for each child. This preserves a level of protection throughout the child’s lifetime as discussed below.

There are Many Years Between the Oldest and the Youngest of My 10 Children.

I don’t want my oldest child to have to wait until they’re 40 to receive their share of the proceeds from the common trust. What can I do?

Once again, you can accomplish almost anything by providing the trustee with clear instructions on what types of things the money in the trust can be spent. For example:

• Can the money be used for medical care for one child, even if it wipes out the whole common trust?
• Are there annual spending limits per child in any category of spending?
• Can the money be used for higher education? If so, what happens if some of the children decide to go to college, and others don’t?
• If the funds in the common trust can be used for advanced education, does that include Masters’ and Doctoral studies or only a Bachelor’s degree?
• Can the trustee advance funds to an older child to buy their first home, to start a business, or to pay the expenses of a wedding?
• If so, are those funds accounted for like every other expenditure in the common trust—or do those advances count against that child’s eventual share?

These and many other questions will be the subject of discussion when you meet with your estate planning attorney to design the trust(s) for your minor children.