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Inheritances that save heirs from themselves

On Behalf of | Nov 9, 2021 | Estate planning

If you’re making your estate plans, you may have an heir that is causing you concern. You want to leave them something, but they have proven to be somewhat irresponsible with their money and assets in the past.

This is your legacy — and these are the assets you worked hard to earn. It’s natural to be concerned about what will happen to them. Can you do anything to protect your assets (and protect your heir from their own worst habits) short of entirely cutting that person out of your will?

An age-based trust

First of all, you may want to use a trust, which can hold the money on behalf of your heir. For instance, you could state that your estate will fund the trust and that the trustee should not give your heir any of the money until they turn 18 years of age. They can then receive 50% of the funds, with the other half coming on their 26th birthday. If their irresponsible behavior is merely due to age, this strategy ensures they receive the funds, they will have a better grasp on how to use it.

An incentive trust

Another option is an incentive trust, which provides incentives for your heir to meet in order to receive the money. For example, you may want them to finish college. You could stipulate that they do not get any of the funds in the trust until they earn their degree. This way, you can at least control how they live or the decisions they make, even if you don’t tell them exactly how to use the inheritance.

What you ultimately decide to do with your estate plans is up to you. Just remember that trusts are one potential legal option you have to accomplish your unique goals.