Trusts provide greater control.
Years of life bring years of experience.
Wisdom tends to grow with age.
As you have accumulated wisdom, you have also grown your wealth.
You want to help your children through leaving an inheritance.
You want the inheritance to be beneficial rather than a stumbling block.
After all, they have not had your years of accumulated financial wisdom.
According to a recent Times Herald-Record article titled “Leaving inheritances to trusts puts you in control,” trusts can be helpful tools.
Many consider trusts to be a tool just for the super wealthy.
This is not so.
When you leave an inheritance trust to your children, you can stipulate that the inheritance passes to your grandchildren rather than the spouse of your child should you child predecease you or die with assets in trust.
You deny control to the grandchildren until a certain age and have someone else manage the funds for their health, education, maintenance, and support (known by the acronym "HEMS" in the estate planning world).
Are your children at risk of creditors, divorces, or lawsuits?
If yes, a trust can provide protections for the assets you leave behind.
Another benefit a trust affords is protection from the fear that your life of hard work and delayed gratification will be squandered by heirs.
A trust with a graduated plan can be beneficial.
This allows specific amounts to be paid out at certain ages or when certain milestones are reached.
The thought is that more money is given as maturity and responsibility increase.
Another trust option is a spendthrift trust.
What does this do?
This trust allows you to put restrictions on the use of the money for the life of your heirs.
Funds cannot be used to underwrite a lavish and irresponsible lifestyle.
A trust can also provide protections for a loved on who has special needs.
A Special Needs Trust can help you provide for such a loved one without affecting his or her eligibility for government benefits.
Not all trusts serve the same purpose.
Discuss trusts with an experienced estate planning attorney to create a plan to meet your specific needs.
Reference: Times Herald-Record (February 16, 2019) “Leaving inheritances to trusts puts you in control”