As you draft your estate plan, have you started worrying about how certain beneficiaries may use their inheritance? Maybe you do want to leave them something, but you are not sure they are ready for it.
For example, maybe one of your beneficiaries is a college student. You love them and want to leave them an inheritance, but you are afraid that they may make reckless spending decisions, especially if you are giving them a substantial amount of money at a young age. Is there any way that you can delay when they receive the inheritance?
Using a trust
One way to do this is by setting up a trust. Some people will create a spendthrift trust. This can help to spread out the payments over time.
For instance, maybe you are worried about leaving $100,000 to a young person because they might spend it all at once. With a spendthrift trust, you could authorize them to receive $1,000 a month for as long as the funds last. They still get their inheritance, but it is much more difficult for them to make extravagant purchases and waste the money.
Another potential option is to specify certain ages at which that person should receive a percentage of their inheritance. You may want to delay things so that they receive 50% of the inheritance at age 25 and the other 50% at age 35. They still get the money, but they receive it when they are older and may make more reasonable decisions about how they use it.
Adding trusts to an estate plan
These are just two examples of how a trust can be used in an estate plan to dictate how an inheritance is passed down. Carefully consider all of your legal options when putting your plan in place.