Using trusts for spendthrift children

Using trusts for spendthrift children

| Sep 13, 2016 | Estate Planning |

In some Ohio families, an adult child may not be good at handling finances. This may leave the parents concerned about their child squandering the assets that they leave. It is possible to pass assets to an adult child in a manner that will prevent the mishandling of money.

A parent who is concerned about a child who is a spendthrift may restrict the manner in which he or she is able to spend the money that is received by setting up a trust. A trust can be established in a way that distributes funds to the beneficiary according to a strict schedule or that leaves the distribution amounts and timing up to the trustee who the settlor has appointed.

In some cases, even people who are normally good with their money are unable to appropriately handle it when they receive large amounts all at once. A parent who has concerns about how a child will be able to handle an inheritance might want to consider setting up a trust to has appropriate controls. Many trusts contain language, for example, that conditions the timing of distributions to the attaining of a certain age or the achievement of tangible milestones such as obtaining a degree or getting married.

People who are concerned about possible inheritance issues might want to talk about their concerns with their estate planning attorneys. This may help them to have peace of mind in knowing that their assets will be passed according to their intentions. If family conflicts are possible, attorneys may also suggest ways to avoid future litigation.