You may be hesitant to leave your inheritance to an heir with a history of making bad financial decisions. We have all heard stories of someone who was left a lump sum of money but spent it too quickly due to a lack of guidance on how to use it. An estate planning attorney can help you find solutions, such as setting up a trust.
A trust is a legal tool that allows you to put restrictions on the distributions of your assets. For example, you could set up terms that would grant your loved one a fixed percentage of the assets annually. Another approach could be to give a trustee the authority to determine when an heir would receive money and what the amount would be.
How Should I Pick My Trustee?
You should exercise caution when selecting your trustee. For some, choosing a sibling could lead to bickering among family members. Instead, you could choose a close family friend or enlist the assistance of a financial institution that provides trustee services.
Tips to Keep in Mind When Setting up a Trust
There are a few things to consider when setting up a trust, including:
- Make sure your inheritance matches your intentions. For example, do you have a loved one with special needs? A grandchild you wish to assist with college?
- Educate your heirs. Consider inviting your trustee to financial appointments.
- Create controls. An estate-planning attorney can help set up “spend thrift” provisions.
A TuckerAllen estate planning attorney can guide you through how federal and state tax laws could apply to your estate and can help you choose which type of trust would be best suited to your needs. Depending on the type of trust, your assets could be protected from creditors or separated from the income of a person with special needs who is looking to qualify for government benefits.
At TuckerAllen, we can help ensure your hard-earned money benefits the people you love, charities, or causes you believe in long after you pass on.