As much as we all hate to admit it, there is usually one in every family – the irresponsible one. Whether it is a spouse, a child or a grandchild, you likely have someone close to you who just cannot handle money. If may be that he or she is simply young and inexperienced. Maybe he or she just doesn’t have a head for numbers. Sometimes it is because of a substance abuse or gambling addiction that he or she just can’t seem to get rid of. Regardless of the reason, if you are concerned about gifting money to this person in your estate plan, you may wish to consider using a trust instead of an outright gift.
Gifting money or assets outright can be the equivalent of throwing the assets away if the beneficiary is irresponsible with the assets. Once gifted, there is no control mechanism to stop the beneficiary from wasting or losing the money. A trust, however, creates that control mechanism through the appointment of a trustee and the implementation of your trust terms.
By creating a trust you have the ability to include very precise trust terms that dictate how and when trust assets can be accessed or spent. Moreover, you appoint a trustee who will oversee the trust assets and administer the trust terms. Through these safeguards, you can rest assured that the assets you leave behind to provide for your loved one are not lost or wasted due to his or her irresponsibility.
- Common Mistakes in Estate Planning – IV - June 14, 2023
- Common Mistakes in Estate Planning – Part III - June 7, 2023
- The Not-So Transparent Corporate Transparency Act - May 30, 2023
