As a parent, you likely want to ensure that your kids are taken care of once you are gone. However, what happens if your adult child is bad with money? Regardless of why your adult child is bad with money, there are some ways you can leave your child an inheritance, even if he/she doesn't handle money so well.
Leave Money in a Trust
A trust is different from a will. A will simply states how you want your assets distributed when you pass away. A trust features a trustor, a trustee, and a beneficiary. You are considered to be the trustor and your child will be the beneficiary. You will appoint a trustee who will be responsible for making decisions on how the money is spent.
Leave Money in an Incentive Trust
An incentive trust is sort of like a reward-based account. You will need to appoint a trustee here but they will not only be responsible for distributing the money but also investigate behaviors that you set forth as conditions of the incentive trust. For example, you can choose to have a certain amount of money distributed upon completing their first year of college or upon keeping a job for a period of six months. If drug or alcohol addiction is the issue, you can have payments distributed to them upon successful completion of a drug or alcohol rehab program or by staying clean from drugs and alcohol for one year.
Leave Money in Installments
Instead of leaving your child one lump sum of money, you can decide to set up a type of trust that distributes the money in installments. For example, you could allow for 1/3 to be distributed when they are age 25, another 1/3 at the age of 35 and the remainder at the age of 40. You could also set it up so that a certain amount is distributed to them each year. A trustee will be needed here, but the difference is that you set when the money is distributed.
There is no right or wrong choice when it comes to leaving adult children money after your death. Even if they are bad with money, there are options for you to leave them an inheritance that falls somewhere between leaving it to them with no strings attached and not leaving anything at all. If you are having problems deciding what the best choice is for you, consult an estate planning attorney, like one at Bayer Jerger & Underwood.
Share10 August 2016
Like many other people, I admire the important tasks lawyers take on every day. I’m amazed at how knowledgeable general attorneys are about a variety of subjects. These professionals can accomplish many complicated jobs seamlessly, such as representing a client in a civil lawsuit, assisting a business with a merger, and acting on a client’s behalf in a medical malpractice lawsuit. Besides creating detailed legal briefs, they must argue their clients’ cases in court in front of a judge, jurors, and others. On this blog, I hope you will discover how crucial general attorneys are to this country’s legal system.