Leaving Assets To Minors And Others Who May Not Be Ready To Inherit

It is a simple fact of life that we may want to leave money, assets or property to people who can’t handle those assets, or who aren’t ready to handle them at the time that you pass, and the property is passed on. How can estate planning deal with this problem?

When the Situation Arises

Let’s say that you have a significant sum of money to leave. However, the person you want to leave the money to is a minor, and thus, isn’t ready to handle the money until adulthood.

Or, the person is an adult, but not a particularly responsible one, and you are worried that they may quickly squander whatever you leave to them. Alternatively, someone may not be able to handle money through no fault of their own; beneficiaries  may be disabled, and may simply not be able to manage finances for medical or health reasons.

Perhaps none of these are the case, and you just don’t want someone to get lazy and rely on your money to live off of.

Using a Trust

In any of these scenarios, there has to be a vehicle that allows what you are leaving to be managed so that it is paid periodically, through time. There is-it is a trust. The person managing the money, and disbursing it as you wish, will be your trustee, which is why it is so important to name someone responsible in that position.

You can determine how much someone inherits, and when, in any way you choose. Some choose to allow for a monthly allowance, where the inheritance is received over a period of years.

Others set milestones. Those milestones can be time-based, such as getting 1/3 of your inheritance at 3 predetermined age milestones, or they can be based on life events or accomplishments, such as graduating college or buying a home.

Leaving money in this manner, can ensure that whoever inherits your money has some motivation to work and accomplish something. Your money is more of a supplement, or a reward, then just money that is plopped on someone’s lap.

Your Long Term Legacy

One benefit to using a trust this way is your legacy. By consistently receiving funds from your estate on a monthly, yearly, or other periodic basis, you are always in someone’s memory. They are always reminded of you and your gift, as opposed to just receiving one large sum all at once, and then 15 years later, when the money is gone, they may not remember as vividly your kind gift to them.

However you opt to do it, the effectiveness of your plan rests on how well drafted your trust is, and who your trustee is. A good combination of both can ensure that someone who may not be ready to inherit property, or who may not be completely financially responsible, is financially taken care of.

Call the Torrance will attorneys at Samuel Ford Law today to discuss leaving property to your loved ones in a way that works for you.

Source:

investopedia.com/articles/investing/101215/how-trust-funds-can-safeguard-your-children.asp