It is not uncommon for people to create trusts to protect assets for their minor children, but they might not think about doing the same for their adult children. However, there are a number of reasons that Ohio parents who are creating an estate plan might want to consider a trust for assets left to adult children as well.
Not everyone is ready to handle a significant inheritance or manage complicated assets. This may be because of irresponsibility or a lack of knowledge, but in either situation, the person may also be unable to accurately evaluate the competence of a financial adviser. A trust can ensure that assets are managed and distributions are made according to the settlor’s instructions. For example, a person might get an annual distribution based on income generated by the trust, or distributions might happen periodically as a person reaches certain ages.
The trust could also be set up so that a trustee decides when distributions occur. For a beneficiary who has a problem such as gambling or substance abuse, the trustee might withhold distributions when necessary. If a beneficiary has or is likely to have problems with creditors, a trust can protect assets. It may also protect assets if a beneficiary gets divorced.
Whether a person decides to use a trust, a will or some combination of the two as part of an estate plan, another consideration is the people who will be appointed to administer the estate. While an executor does not need to be a financial expert and can get help from an attorney or other professionals if needed, a complex trust may be best managed by professionals. A person might also want to consider discussing the estate plan with family members. This can help give them a better understanding of the rationale behind the plan.