Each person will have their own personal struggles. Some may be exploring their path in life and still learning about what they want. If you are planning out your estate, these are situations that you should consider. There have been many cases in which heirs or beneficiaries fail to understand the value of what has been left to them. As a result, they are irresponsible with their choices. Money can be mismanaged, heirlooms squandered, and knowledge wasted. In some cases, the outcome can be disastrous. By ensuring you have the right estate planning tools in place, you can feel reassured that your heirs will be less likely to misuse what they have been given.
Times in Which an Heir May Not be Ready for an Inheritance
When you speak with an estate and probate lawyer, he or she might ask you various questions to help you to understand your current situation, as well as that of your named heirs. As you consider this, you might come to realize that an heir is not ready to receive your inheritance. For example, anyone under 18 will not be able to sign legal contracts. This should be addressed in your estate plan. You would need to name a guardian who would control their inheritance, or establish a custody account or conservatorship. It is also possible that the probate court will choose how the minor is to receive their inheritance. If this should happen, there will be less control over how the inheritance will be managed.
Once the minor turns 18 years of age, they may receive an inheritance in a lump sum. Eighteen years old is still young, and in general, giving a young person such a large amount of money is risky. As a probate lawyer would advise, sound investment strategies should be considered. In doing so, the inheritance will likely be preserved.
Another problem might be when the heir is an adult, but struggles with a gambling or substance abuse disorder, is financially irresponsible, or has a disability. Others might be in excessive debt with creditors coming after them, and there are those who may be getting a divorce. Leaving an inheritance to a person like this could be considered risky. It might also cause significant probate litigation problems which would almost certainly require a probate lawyer. Whatever the reason might be for your heir’s financial unpreparedness, it is important that you plan ahead. Some estate and probate lawyers would recommend a testamentary trust to protect the inheritance.
Understanding Testamentary Trusts
Testamentary trusts can be used when you wish to leave an heir an inheritance, but you don’t want to give them a lump sum. The trust will be managed by a trustee, which could be a trust lawyer, for the benefit of the beneficiary. There are many options to consider; for example, you will be able to:
- Instruct the trustee to pay for specific expenses using the trust
- Give the trustee discretion in choosing when financial distributions should be made
- Make financial distributions conditional on the beneficiary maintaining a certain GPA, graduating, turning a certain age, and so forth
- Give the trustee discretion on when the distributions can temporarily stop; for example when the beneficiary is gambling
Protect Your Heir’s Inheritance Today
Every family has their own estate planning needs. Some might require a strongly crafted will, others may be better suited to a trust. Regardless, there will be an objective to avoid any sort of litigation while keeping everyone satisfied. If you are ready to plan your estate, call an estate planning lawyer, like an estate planning lawyer.