Why Every Family Law Attorney Should Consider A Children’s Future Trust

By Phil Rarick, Miami Estate Planning Attorney and Jacqueline Bowden Gold, Miami Lakes Estate Planning Attorney

Sometimes the best designed Marital Settlement Agreements fail because they lack a strong mechanism to ensure that support payments, designated for the children, are not wasted by poor money management, by either or both parents. In such circumstances, Family Law Attorneys should consider a Children’s Future Trust or CFT for short. A Children’s Future Trust can help protect and safeguard the children’s future education, health and essential lifestyle needs. Here are some benefits:

1. Secure and Ensure Prudent Management Of Child Support Funds By An Independent Trustee

   Example: Wife is a big shopper and has history of running up multiple credit cards. Husband wants to set aside funds in addition to his child support obligation but is concerned wife would waste such funds if she has any access or control over these funds. Funds transferred to the Children’s Future Trust would be under the management of a neutral Trustee and not susceptible to her influence.

2. Secure And Protect Educational Funds To Pay For Private High School or Private Tutoring

   Example: Both parties agree that they wish to ensure their two children, ages 4 and 6, attend a private high school costing $16,000 per year, for each child. The parties cannot afford to make a lump-sum payment into a bank account at the time of their divorce. Instead, husband and wife agree to fund a Children’s Future Trust with $2,000 per month.

3. Secure and Protect Florida Pre-Paid College Plan or 529 Educational Plan

   Example: Husband is a dentist and poor money manager. Wife is concerned he could raid the Florida Prepaid College Fund or 529 plan that was set aside for their children’s educational needs. Such funds could not be reached by Husband if owned by a Children’s Future Trust, where joint trustees or an independent trustee is required.

4. Ensure Life Insurance Funds Are Not Wasted

   Example: Husband, a Miami fire fighter, is required to purchase a $1 million life insurance policy to ensure payments of his 12-year-old son’s support requirements. Husband wants the wife to receive policy benefits to cover the child support payments but wants any excess funds to be held in the trust for the minor child. The Children’s Future Trust would help ensure that the child support obligations continue until the child reaches emancipation. Once child support payments have been fulfilled, any additional funds can be used for son to receive a good post-high school education – and protect him from making ill-advised decisions that young persons are prone to make.

1. What can a Children’s Future Trust own? Virtually anything, including Florida homestead property if properly drafted.
2. How flexible is a Children’s Future Trust? To provide a high level of asset protection, the Children’s Future Trust must be irrevocable. However, flexibility is built in to allow for modification if needed to serve the best interests of the children.
3. What are the tax ramifications of a Children’s Future Trust? Usually the Children’s Future Trust is set up as a grantor trust, so taxes are paid at the rate of the grantor.
4. How much does a Children’s Future Trust cost? The cost range is from $1,750 to $3,500 depending on objectives of each client. Once we determine client’s objectives, our Firm’s policy is to give the client a written Scope of Work with the total cost.

Trust Attorneys at Rarick & Bowden Gold, P.A. have over 60 years of combined experience in trust law. Over the years we have worked with many family law attorneys in Florida and outside the

state. We would be happy to discuss any of your pending cases that may be candidates for a Children’s Future Trust. Call Jacqueline Bowden Gold at (305) 556-5209 or email her at jbowden@raricklaw.com

Special Thanks to family law attorney Gregory Betancourt for his comments and contributions to this Report.