What happens if I have multiple minor children at the time of my death?

Mar 14

What Happens If I Have Multiple Minor Children at the Time of My Death?

If you're a parent with more than one minor child, one of the most important questions to consider when creating your trust is this: How should I structure things if I pass away while my kids are still young?

The answer depends on your goals, but one of the biggest decisions you'll make is whether to set up a common pot trust or create separate shares or sub-trusts for each child.

What’s a Common Pot Trust?

A common pot trust is a single trust set up for the benefit of all your children. The trustee uses the funds to support any child as needed, and the trust stays active until the youngest child reaches a certain age, such as 25 or 30. The common pot trust can be a better fit for families that want more flexibility in the amount of access to the trust. The common pot trust allows the trustee to respond to each child's shifting needs without being constrained by a fixed share of the estate. Some parents also choose it because if one child faces unexpected hardships, the trust is flexible and can direct more resources where they are needed most. It can be helpful when children are very young and their needs are similar, but it does come with challenges, such as unequal distribution and potential disputes.

What’s a Separate Share or Sub-Trust?

Separate shares or sub-trusts mean that, upon your death, each child’s portion of the trust is earmarked and managed independently. Rather than having one shared pot, the assets are split into individual trusts—each with its own terms and timing. These are still often managed by the same trustee, but makes the overall process easier for them, and ultimately more fair for the beneficiaries.

Why I Almost Always Recommend Separate Sub-Trusts:

While every family is different, I usually recommend setting up separate shares or sub-trusts. Here’s why:

It makes life easier for your trustee.
When the assets are divided into separate shares, your trustee doesn’t have to worry about fairness or whether they're spending too much on one child and not enough on another. The shares are already set, which takes a lot of pressure off the trustee.

Older kids don’t have to wait for the younger ones.
In a common pot trust, no one receives their full inheritance until the youngest child reaches the age of final distribution. With separate trusts, each child’s trust operates on its own timeline. This means your older children can receive their inheritance at the age you choose—without being held up by a younger sibling.

What Happens Without Any Trust:

If no trust is in place, any assets left to the children will be distributed by default state law. This means that, typically, each child will receive their share outright when they turn 18. This can also lead to the same inequity that parents try to avoid, and many children inherit a significant amount of money with no safeguards in place. A trust gives you more control and comfort in knowing your children’s needs are being cared for in a way that protects both their future and your wishes.

Additionally, without an estate plan in place, guardianship of your children is determined by the court. This means that your wishes may not be respected, and your children may end up in the care of someone who does not have their best interests at heart. Setting up an estate plan that can help ensure that your children are cared for in the manner that you desire.

Learn More:

To learn 80% of what you need to know about estate planning in less than 30 minutes, check out myfull-length video. It’s a quick and comprehensive guide to help you understand the basics and start taking steps to secure your future.

If you’re thinking about creating or updating a trust for your children, I can help you design a plan that fits your family’s needs and goals. Or, if you would like me to review or create a trust for you, then click the link below to schedule a call with me today - I’m always happy to help!

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