If you have amassed a great deal of wealth and assets over your lifetime, you may worry how your heirs will use it. You may also worry about how your heirs will waste it. This may lead you to wonder whether you can use a trust to control how your heirs can spend your money.
Restrictions on money
One of the many benefits of a trust is that you can set conditions and restrictions on how your heirs (the beneficiaries of the trust) can use the money in the trust. Whether or not they meet those conditions and restrictions is monitored by a third-party trustee.
For example, you can limit distributions to only after a certain age, like after 25 or 35, or keep the amount secret, which could force them to make their own way.
You could also limit the funds for certain expenses, like education, housing, vehicles, etc. Alternatively, you could limit the funds to only transferring upon the accomplishing of certain goals or milestones, like graduating college, or even penalizing fund distributions for substance abuse.
There are some limitations, especially if your trust requirements are especially onerous. First, your trustee must actually carry out your wishes. While you can do it while you are alive, you will need to name someone for after you pass. This person will need to be able to actually carry out your wishes, including saying, “no.”
Second, think about how your restrictions will affect your heirs’ happiness and their well-being. Talk to professionals, including both financial and healthcare professionals. While you may have good intentions and want to protect them from themselves, others and their demons, you may unintentionally harm them, create resentment in you or other family members or even litigation that could eat into the family estate.
Finally, your trust must comply with Massachusetts state law, including the Uniform Trust Code. Too many restrictions and conditions could leave your trust itself up to litigation and challenge. And, your heirs could request a court to modify or terminate your trust if it becomes inconsistent with either your original intent or the heirs’ interests.
Can I use a trust to control how my heirs spend my money?
In theory, yes. But, you should be reasonable and do so with professional advice so as to not create a draft that destroys itself, your heirs or your family.