Are you worried about losing control of your estate after you leave it to your children? You worked hard for years to create your wealth. You’d like to think your heirs will use it wisely, but there is really just no way to know. You can’t control how they use that wealth when you’re not around.
Or can you?
One option is to put the money into a trust, rather than giving it directly to the children. This way, the trust owns it and distributes the money in accordance with your wishes. This gives you an incredible amount of control.
For instance, perhaps you do not want a child to get all of the money at 21 years old. Your trust could stipulate that 10 percent pays out at 21 years old, another 15 percent pays out at 25 years old, 25 percent pays out at 35 years old, and the rest of the trust pays out at age 45. Even if a young child burns through all that money at 21 years old, he or she can only waste 10 percent. As the child grows and matures, more money is given to a more responsible individual.
Another option is to designate money for very specific purposes. Some could be set aside for college tuition, both for your heirs and for their children. Some could be used for future medical expenses and long-term care. Some could be set aside to help each child buy a home. This way, you know you are giving your family valuable assistance that will truly help change their lives.
These are just two examples. Trusts vary and offer a lot of flexibility. Make sure you know all of the options you have.
Source: Fidelity, “6 reasons you should consider a trust,” accessed April 05, 2018