Fact: Most young people lack the skills to manage large sums of money, yet this is exactly what happens when they are left money as part of a will. A safer choice is to consider leaving them money as part of a rock-solid trust. Creating a trust with the help of a knowledgeable attorney and well-thought-out terms is your safest bet to ensure money isn’t wasted or squandered.
Benefits of a Trust
When you leave money in a will you have no control over how the money is distributed to your loved one or how long it will last them. Life is full of unknowns. You worked your whole life to be able to leave something for them, yet they could easily fall vulnerable to things such as bankruptcies, a greedy spouse, or even friends or family coming out of the woodwork for loans. You protect them from these things by creating a trust.
Age of Payout
A wise choice to consider is an age-based payout. Many choose to use a trust to distribute money at various ages in set amounts. It is up to you as to what ages your loved one will receive money. If they are irresponsible, the money won’t be distributed all at once. If they were to squander the first payout, they can still recover and have a successful financial future. Traditionally, people choose payouts at 25, 30, and 35. You can also choose to have other conditions attached to the trust.
Stipulations for Payout
As the creator of the trust, you decide how it pays out. You can designate that the trustee must be employed and can even have the terms stipulate that the amount of payout be equal to his/her salary. If your loved one has struggled with mental health issues, you can make it a condition that they regularly see a therapist. By talking it over with your attorney, you can have as much control over the trust as you wish.
