What is a 503(g) Trust?

A 503(g) trust is a trust created by the courts to protect the best interests of the minor children.  The statute states as follows:

“the court if necessary to protect and promote the best interests of the children may set aside a portion of the jointly or separately held estates of the parties in a separate fund or trust for the support, maintenance, education, physical and mental health, and general welfare of any minor, dependent, or incompetent child of the parties.” 750 ILCS No. 1-14-1453 – 14 – 5/503(g) (West 2012). Furthermore, a need for such protection arises when the noncustodial parent is either “unwilling or unable to make child support payments.” In re Marriage of Petersen, 319 Ill. App. 3d 325, 343 (2001).

One example of a situation where a 503(g) trust is needed is when a party has been ordered to pay child support and fails to pay child support despite having large amounts of money in a money market, bank or as a settlement from a lawsuit.  If the Court finds that the person has willfully failed to pay child support despite having the ability to do so, the Court will want to protect the child’s financial interests by creating a trust and placing any settlement funds or trust funds into said account to ensure that any arrearages on child support can be paid from there.

The rationale for a 503(g) trust is that it is unfair for someone who is unemployed or underemployed to avoid paying child support when they live in opulence pursuant to a trust fund, lawsuit settlement, or lottery.  Meanwhile, the person pays little to no child support and the child will suffer financially.

As a result, the Judge has the discretion to create such a trust and place the amount of sum the court deems reasonable to protect and preserve the child’s best interests.

In one of our cases, the father claimed he could not work because of a work injury yet received a huge settlement from a personal injury case.  While he paid about $200 a month in child support, he received over $200,000 in a personal injury lawsuit.  We were able to secure a 503(g) trust so protect and collect on the payments he failed to make on child support due to his lack of employment.

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