When you have a lifetime of resources at your disposal, you may want to do something supportive and loving for the people closest to you. Unfortunately, not everyone handles receiving an inheritance well.
Some people with a predisposition toward destructive or irresponsible personal behaviors may squander their inheritance or possibly use it to harm themselves, particularly if they have substance abuse issues. If you have children, grandchildren or other close family members whom you want to leave an inheritance but worry about, a spendthrift trust could be the perfect solution.
You can give someone long-lasting support through a trust
There are countless ways for you to structure a trust, and the exact method that you use will depend on the assets you want to fund the trust with and how long you want the trust to exist.
Creating a system that allows for regular, small distributions could cover the living expenses for a vulnerable loved one reliant on state benefits. Planning out a distribution schedule can allow someone to receive small amounts throughout the year without that inheritance ending their eligibility for benefits.
A trust that allows beneficiaries to request distributions for certain expenses, like their mortgage, their health care or their educational costs can eliminate the risk of people frittering away or abusing their inheritance.
You can set conditions on when or how people access the trust
You can name a trustee or even multiple co-trustees to manage the trust, maintain its assets and monitor beneficiary disbursements. Your trust will help enforce the terms that you set restricting what people can use the assets for, when in their life they can make a withdrawal and/or how much they can access at one time or in total..
Those who want to support their loved ones but worry about how an inheritance might cause more harm than good could benefit from the creation of a trust as part of their estate plan.