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Can you control how your heirs use their inheritance?

On Behalf of | Jan 17, 2023 | Estate Planning & Probate

You do want to leave an inheritance to your heirs, but you’re also wondering how they’re going to use that money. Maybe they have struggled with gambling or drug addiction. Maybe they’re just young and you’re worried that they’re going to waste money on things they think are fun, rather than spending it on something that you believe is important – such as a home or a college education.

You’re not interested in cutting them out of the will so that they don’t use the money this way. You just want to have more control over that money even after you have passed away. Is there a tactic to do this?

Trusts are flexible financial tools

The solution may be to use a trust. There are many different types of trusts and they are flexible so that they can be set up to accomplish whatever goals you have in mind.

But the general rule is that the trust is a fund that holds the money from the inheritance. The trustee is then in charge of distributing that money, rather than the beneficiary. In an educational trust, for example, they could use it to pay college tuition on your heir’s behalf. In a discretionary trust, the trustee could simply decide if they felt you would have approved of the purchase, regardless of what it was.

In this way, you can use the trust to control how the money can be distributed and spent. Your heir still gets it, but you also get the assurance that they are going to use the money in a way that you approve of. Trusts can also be used if your heirs are simply young and you would like to delay the date at which they get the money until they are a bit older.

Regardless of what you would like to accomplish, be sure you understand all the estate planning tools at your disposal.