Will the beneficiaries of your estate be responsible in handling their inheritance? Should you distribute the assets of your estate to your loved ones outright and free of any controls, or is there a reason you will want to distribute assets to your estate beneficiaries over time or in increments? Or do you imagine that after your demise your hard earned assets will be spent quickly and frivolously?
Let me tell you why I am posing these questions. Some of our clients have a hard time making the difficult decision to see that their loved ones are protected from themselves. I have seen first hand a beneficiary spend a substantial amount of money on drugs in one year and have nothing left for the remainder of his lifetime. I have also seen a parent set up a “spendthrift” trust so that the child does not have direct access to the inheritance but instead the inheritance is distributed over the child’s lifetime. Whether it is drugs, alcohol, gambling, financial irresponsibility or some other way that money can quickly disappear, there are alternatives on how to distribute the money to an irresponsible beneficiary.
One possibility would be to set up a trust where the trustee of the trust pays the beneficiary’s full expenses (i.e. food, clothing, shelter, transportation, phone) and therefore the beneficiary’s needs are met without receiving any money directly. Another choice would be to set up a trust so that the beneficiary receives a stream of income for their lifetime and is then responsible to pay their own bills from a monthly stipend. The options are diverse and are developed with an attorney to meet your specific situation.
Over the years, our law firm has encountered many diverse family dynamics. There are many estate planning vehicles that can facilitate the optimum outcome for your beneficiaries’ strengths and weaknesses. Don’t put your head in the sand. If you feel someone you care about needs extra protection, a qualified estate planning attorney can help you put the right plan in place.
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