As you create or revise your estate plan, you will want to consider how your beneficiaries will receive their share of assets. This point is especially worth pondering if you have children, some of whom may be more responsible with money than others. If one or more of them runs the risk of blowing through your estate, you will likely fear you must take drastic measures to prevent them from doing so. Yet, you have ways to safeguard your assets without shorting your children.
Establishing a revocable trust
One mistake that many people make is leaving assets or funds to their children outright. By doing so, you make them easily accessible, which increases the likelihood your children will use them quickly. To protect your property, you will want to establish a revocable trust. This arrangement allows you to set an annual distribution your children will receive, which you can limit as necessary. Their share of the trust’s funds, then, will pay out over an extended period, instead of all at once.
When establishing a revocable trust, you will want to give the trustee broad control of distribution. One of your children may have financial or addiction issues and may use the trust’s funds in an irresponsible manner. In this case, you can outline in your trust documents that the trustee can cut off – and resume – their distribution at any point necessary.
Preserving your legacy
Setting up a revocable trust allows you to preserve your legacy and protect your children. By stipulating a limited annual distribution, you will ensure your assets last longer once you pass. Doing so also will keep your children from making poor financial decisions that can come with a sudden windfall.
By accounting for your children’s circumstances, you can create an estate plan that ensures they will use your assets responsibly. An estate planning attorney can review your current arrangement and make sure it aligns with your family’s needs.