When parents set up trusts for their children, one reason they often cite is that they do not want the child to get all of the money too early. While the child may technically be an adult at age 18, for instance, they cannot imagine giving a high school senior or a college freshman all of the money they have saved up over the course of their lives.
Instead, they’ll set up an age-based trust that makes distributions mandatory at specific ages. Much of the time, the common ages they pick are 25, 30 and 35. In some cases, they just pick one, but they often spread it out. For instance, a child may get $50,000 at 25, $100,000 at 30 and the rest of the balance at 35.
However, experts note that parents tend to change these ages as they and their children grow older. They begin to lack confidence. When they had a 1-year-old child at home, waiting until they were 25 seemed so far off, and they may have felt like the child would be responsible enough by then. As parents of a 22-year-old college student, though, they may have started doubting just how ready the child is for that type of money.
It’s not just confidence in the child’s abilities that changes. It’s also possible that they used percentages, not hard numbers, and their estate has increased significantly in value over the last two decades. The amount given at 25 could then feel far too large.
If you’re thinking about using one of these trusts, it’s important to know how your desires may change over time and what options you have.