Some individuals born to inherited wealth continue to work and/or involve themselves in meaningful volunteerism despite their vast income from generational wealth. Others – sometimes from the same family – waste their inheritances and lead dissolute lives.
If you are worried about the latter choices by one or more of your heirs and beneficiaries, you have a chance to protect themselves from their worst urges.
Learn how a spendthrift trust can help
You likely don’t want to see your heirs penniless or on the street. A spendthrift trust can provide heirs with a monthly, quarterly or annual income based on disbursements from the trust by the trustee. You select the trustee and typically an alternative person to fill that role.
A word of caution about trustees
It is not recommended that you appoint as trustee a sibling, parent, child or another heir over the spendthrift trust of another relative. There are far too many possible ways that could cause relationships to go south quickly.
Understand how exceptions might work
Can there be exceptions to the trust’s provisions? Certainly, and this just reinforces the above point about selecting non-relatives for the role. Situations crop up in life, e.g., medical bills for treatment, wherein your beneficiary needs access to a larger sum on money than the typical disbursement.
A non-relative trustee can find it easier to dispassionately weigh the pros and cons of making a one-time larger payout. If beneficiaries and heirs are related, these requests and decisions can wreak havoc on familial ties.
How to make the best choices?
Never make decisions about estate planning in anger or without first researching all your options, Take the time and due diligence to make a well-informed choice that reflects benefits to all.