Irrevocable trust in favor of minor

[Cortisol]

What is the name of your state?: California.

My husband and I would like to set up an irrevocable trust, gift our homestead to it, and name our minor daughter as beneficiary of said trust.

Questions:

1. Can both of us act as trustees? What are the pitfalls of nominating ourselves as trustees?

2. Alternatively, can we name my mother and his father (both living outside the United States and not citizens of the United States) as trustees?

3. What happens if we have another child and wish for him or her to jointly inherit the house with his or her older sister?

4. We both plan to live in this house until we die, so we don't see any major problems in the future. However, we're aware that we cannot sell this house until she attains majority and agrees to the sale. What of property tax, though? We will still have to pay property tax, of course, but would we be able to deduct it from our income?

 

[tecate]

Why do you want to do this?

 

[Cortisol]

Why do you want to do this?

Asset protection and estate planning.

 

[tranquility]

I think you came up with this scheme all by yourself, right? tecate asked the question because everyone has different goals and you never know when someone has some odd set of facts which make a plan, which seems silly on the surface, exactly right for them.

This plan seems silly on the surface. I was going to start listing all the reasons why, but the misconceptions of what you believe will be occurring are too great to name. See an attorney. There is nothing in your goals or facts stated which make this a good plan. Nothing.

Info edit:
For a start in the inevitable followup question from the OP,

What are the pitfalls of nominating ourselves as trustees?

You kid can sue you for breach of your fiduciary duties.

Alternatively, can we name my mother and his father (both living outside the United States and not citizens of the United States) as trustees?

Nothing illegal, but dear God in heaven, don't expect to ever get anything done with any of the trust property in any kind of a rush. Also, be prepared to fill out government forms up the wazoo in any large transactions.

What happens if we have another child and wish for him or her to jointly inherit the house with his or her older sister?

Then you should probably buy another house as this one has already been given away to your first child. (Remember to file appropriate gift tax returns.)

We both plan to live in this house until we die, so we don't see any major problems in the future.

Except for the fact you don't own your house, fine. You need to be paying fair market rent to the trust (hence the child) to avoid a fiduciary breach by whoever the trustee is. Pray the trustee or your child never feels the property could be put to a higher use regarding the duty to invest the assets properly or your time in the house could be limited.

If by homestead you mean a small portion of the value of your home, you can't do that as homestead protection is a personal thing.