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Trust funds for kids can work for families

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POSTED: March 2, 2013 1:54 p.m.

In a move that made headlines, Mama June, mother of 7-year-old beauty-pageant starlet and reality TV star Alana “Honey Boo Boo” Thompson, recently set up trust funds for each of her four girls and her infant granddaughter.
Rather than spending the reported $15,000 to $20,000 per episode that the family receives from the production of TLC’s “Here Comes Honey Boo Boo” on a new home or car or fancy clothes, June Shannon recently told TMZ that TLC deposits most of the money in equal portions into the accounts. The girls — who are 1, 7, 12, 15 and 18 — won’t have access to the accounts until age 21 except in case of medical emergency or to use for school.
What makes this announcement so remarkable is not that Mama June would set up trust funds for her offspring, but that many parents of child actors have failed to do so. Hollywood history is rife with accounts of unscrupulous stage parents spending their child’s earnings and leaving their child broke by adulthood.
Macaulay Culkin of “Home Alone” fame had to file for emancipation when he was 16 to wrest his fortune from his manager parents. Culkin was the highest-paid child actor of all time with a net worth of $17 million. Country-music star Leann Rimes sued her father for $7 million in 2000 for mismanaging the funds she earned starting at age 13.
But trust funds are not just for those with fortunes fueled by a child star. Anyone, with the help of an experienced estate attorney, could set up a trust fund to protect a child in case of a parent’s death.
Parents can choose from several different types of trusts and can determine different conditions that the child must meet to inherit the money. An irrevocable living trust means the terms cannot be changed, effectively preventing the child from touching the money before he or she is ready. Trusts also provide certain tax advantages and protection from creditors.
While Mama June appears to have chosen to allow the girls access to all of the money at age 21, most parents choose to disburse trust funds in increments such as ages 25, 30 and 35. This allows children to mature with the growth of their fortune. If they make poor investments or poor personal choices with their first allotment, it allows them to learn from their mistakes without completely depleting the inheritance.
Although Mama June’s interview with TMZ did not include any other conditions of the trust funds, she may have been wise to include a provision to cut off funding if any of the girls develops a drug or alcohol problem. Several notable child stars have become entangled in abusive habits.
Eighties heartthrob Corey Haim lost his fortune due to drug addiction and died penniless in 2010. After co-starring in “Terminator 2: Judgment Day,” Edward Furlong became addicted to heroin and cocaine. Although he claims to be drug-free, he has been arrested several times, most recently for domestic violence in October. Tatum O’Neal — the youngest person to ever win an Academy Award, for Paper Moon, at age 10 — has been in and out of rehab, most recently in August.
Fame usually is short lived, but proper planning could help Honey Boo Boo and her family enjoy the proceeds of their fame for a long time. If you would like help planning your family’s future, an experienced estate attorney can help you decide which kind of trust is best for your family and which conditions may need to be set to protect the interests of your loved ones.

Barid of Richmond Hill and  Smith are co-founders of Savannah-based Smith Barid LLC, which specializes in elder law, estate planning and special needs planning. They can be reached at 912-352-3999 or richard@smithbarid.com or msmith@smithbarid.com.

 

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