The terms of a good trust are just as much about protecting your assets as they are about distributing them. Of course you want your children and grandchildren to be able to enjoy your hard-earned estate, but do you really want your 18-year-old grandchild to blow it all on a spring break getaway or on a bad investment that they will regret in years to come? Creating the terms of your trust is a way to instill some wisdom into your dependents, something that they will surely be thankful for in years to come.
Your options when it comes to distribution
It has been a well-known tradition for heirs to receive their inheritance at a certain age, on their 25th birthday, perhaps. Many financial advisors say that times have changed, and people are tending to settle down later in life. 25-year-olds are more likely to be traveling the world than starting a family and understanding the consequences of financial management. Many advise that age 30 or 35 is a more appropriate time to receive a trust fund.
There are also ways to prevent an heir from receiving all of their inheritance in one sum. You may think that it is wise to create a yearly schedule in which your heir will receive the inheritance gradually.
The great advantage to a trust is the amount of flexibility you have in setting up the terms and the rules. It will mean that you can have the peace of mind that comes from knowing that your estate will be distributed and used as it was intended to be.
Source: CNBC, “Heir tight: The dos and don’ts of creating rock-solid trusts,” accessed Nov. 24, 2017