A parent dies with a large estate and leaves behind a minor child(ren). The decedent was divorced when he/she died. How can the surviving parent, if appointed legal guardian, protect the child’s estate from wasteful decisions and actions.
The guardian statute(s) provide procedure for setting up a trust on behalf of a minor child. Codified at N.J.S.A. §3B:12-54.1, a parent or guardian may apply to the Superior Court, Chancery Division, Probate Part to get permission to set up a protective trust for the benefit of a minor child or children when they would otherwise be receiving assets from an intestate estate when they are under 18 years of age. The application to the Surrogate’s Office can be made by the biological mother/father.
The statute does specify the terms of the trust. While it does use the word may, it is likely the court will order that the following terms be included in the trust:
- The trust assets and the income therefrom shall be used for the exclusive benefit of the beneficiary, including but not limited to the beneficiary’s health, support, maintenance and education, including college and post-graduate work, in the discretion of the trustee;
- The beneficiary shall have the right to request distribution of trust principal as follows: one-third of the principal after attaining the age of 25 years, one half of the then balance after attaining the age of 30 years, and all of the then balance after attaining the age of 35 years; or at such ages as the court, in its discretion, shall determine;
- Should the beneficiary die prior to the termination of the trust, the remaining trust principal and accrued income shall be distributed to the beneficiary’s estate;
- Two individual trustees, or one corporate trustee, or a combination thereof, shall serve at all times, with or without bond, as the court shall determine in its discretion;
The statute finally provides a list of factors a court should consider before making its decision. They include:
- The amount of money involved
- The availability of other resources for current maintenance and support
- The stability of the entity offering an investment covered by the supplication
- Income tax consequences
- Any special needs or vulnerabilities of the minor
- The financial and psychological consequences of putting all or a substantial part of the minor’s estate out of reach for a long period of time.
Many surrogates are unfamiliar with this option so if the blog is relevant to you call my office and let’s get together and talk.
To discuss your NJ Guardianship Trust matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at email@example.com. Please ask us about our video conferencing consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Guardianship Trust Attorney