Here’s an example of how a trust could work: Presume that your will leaves everything to your spouse. In the event that your spouse dies before you do, your will leaves everything to your five minor children. Because your five children are minors, the state circuit court will need to appoint a guardian to manage your children’s finances. Under South Dakota law, the guardian may be required to file a financial accounting with the state circuit court. Sometimes, the guardian must get the state circuit court’s permission to spend money for the children. Perhaps most alarming is that as soon as your minor child turns eighteen, the child receives his estate share outright. Of course, most eighteen year-olds are not mature enough to handle this kind of major financial responsibility.
A trust, however, allows you to designate whether or not the trustee must post a bond or file accountings with the state circuit court. You can also grant the trustee discretion as to how to spend or invest the trust assets and designate the age that the trustee can provide the property to your children. For example, you might postpone distribution until at least age thirty, or sometimes half at age thirty and half at forty. In other words, your trustee can make sure that the funds are used sensibly, such as to pay for a child’s college education, before your trustee has to turn the property over to the child.