The writer Ralph Waldo Emerson once said, “Money costs too much.” A quick scan of the tabloids or celebrity gossip columns would back him up. They are full of tales of people who inherited vast sums of money, which they did not have the maturity to handle. Drug problems, alcohol abuse and wild behavior, make great fodder for the press but lead to arrests and rehabilitation centers for many celebrity heirs.
Even a relatively small inheritance can be a lot to handle for someone young. That is why many parents use a trust to pass on assets to their children.
You can set up a trust to pay out in different ways. You might prefer to provide a steady income source to your beneficiaries rather than one lump sum. Or you could opt for lump-sum payouts when they reach a specific age where they will hopefully be more mature.
You can also specify what the money you leave is to be used for. Many children have only attended private school or university thanks to the trust that their grandparents or earlier generations created to educate the family.
Using a trust can protect your beneficiaries from themselves. It can also protect your assets from other people. Funds you place in an irrevocable trust can typically not be claimed by people you owe money to when you die. Passing assets to your child via a trust could also prevent their spouse from claiming them in a divorce.
There are many types of trust for different purposes. While they may seem complicated, an experienced estate planning attorney can help you find the best option for you and your family.