By: Charlie Curtin

As a Trust Officer, my department is often responsible for handling other people’s finances. We are involved in matters such as Trusts created under Last Wills and Testaments, personal injury settlements for minors, and guardianships. Our role as a fiduciary is to safeguard our customers’ funds and make sure they aren’t misused. It may sound simple, but believe me, it’s anything but easy

Under Pennsylvania law, the age of majority (the age at which a child legally becomes an adult) is 18. Without proper planning, that means an 18‑year‑old can suddenly gain full control over an inheritance. Think back to when you were 18. I know I was naïve. I had no real understanding of money. I remember asking my father to lease me a convertible for $450 a month because I thought it was a bargain and I’d look great behind the wheel. He laughed right in my face, and rightfully so.

One recent situation really highlights why Trusts matter. A child’s parent unfortunately passed away without a Last Will and Testament, and the 17-year-old child needed our bank to handle her inheritance. When she turned 18, we were legally required to release the funds to her. Within three months, a substantial inheritance, several hundred thousand dollars, was completely gone. Money intended to support her for years disappeared in just weeks. I don’t blame her; she simply wasn’t ready to manage that kind of responsibility at 18. Having a Trust in place would have helped.

As you can see, if you have minor children, it is wise to include a Trust in your estate plan, specifically adding Testamentary Trust(s) in your Last Will and Testament(s). Trusts amongst other benefits can delay when an inheritance is received, ensuring young people don’t stumble into a large sum of money all at once before they’re prepared to handle.

At its core, a Trust is an agreement that sets aside money or other assets for someone else (the beneficiary). The Trust’s terms determine how and when assets are distributed. Testamentary Trusts, those trusts created under a Last Will and Testament, can specify the age at which a beneficiary receives their share. A common example is distributing one‑quarter of the trust at age 25, another quarter at 30, and the remainder at 35, to delay a young person’s access to funds until they are financially mature.

Testamentary Trusts are normally funded after an Estate is completed. Then, the chosen Trustee manages the Trust’s assets and investments and reviews any and all distributions. The Trustee has a fiduciary duty to act only in the best interests of the Trust and its beneficiaries.

The Trust language itself determines how its income and principal will be distributed to the beneficiary. A Trust can be as flexible or as restrictive as needed. It is up to the creator of the Trust to contemplate the best way they believe necessary.

As you can see, establishing a Trust in a Last Will and Testament for a minor is an essential strategy for young parents. They protect assets until the beneficiary is ready, provide financial support and oversight, and often shield beneficiaries from others with an interest in those funds.

While we are discussing children for purposes of this article, Trusts can be helpful in many situations, including for those who want to support charitable causes. If you are charitably inclined, the Scranton Area Community Foundation is a great resource of knowledge and insight. Contact a representative anytime!