You have worked so hard your entire life so you can have an inheritance to pass down to the people you love when you die. However, you’ve read tragic stories about heirs who blew their inheritance. And you are genuinely concerned.
It is very natural to feel concerned about your legacy and loved ones. And sometimes, it is never because you worked hard to build that business empire after all. You basically want the best for the people you love, and you may not be certain all your heirs will prudently manage what you have bequeathed to them. Fortunately, there are steps you can take to prevent your heirs from misusing their inheritance.
Using a spendthrift trust to distribute your assets
One of the most effective tools you can use to prevent a beneficiary from wasting their inheritance is a spendthrift trust. Basically, this trust allows you to control how a beneficiary will receive and use their inheritance. In other words, while the beneficiary is to receive their inheritance, they may not withdraw the principal. This preserves the assets for future generations while preventing beneficiaries from making irresponsible financial decisions. You can make a trust spendthrift by including a spendthrift provision or making it irrevocable.
There are a few compelling reasons why you should consider including a spendthrift trust in your estate plan. The most straightforward one is when you want to control how your beneficiaries will access their assets. For instance, a spendthrift trust can be a great idea if you want your college-going children to attend school but do not want to give them access to the principal.
Protecting your legacy
You absolutely want the very best for your loved ones. If you are concerned about your heirs’ ability to manage their inheritance, you need to include a spendthrift trust in your estate plan.