Do you have an adult child you’d like to transfer assets to, but you’re concerned about their ability to handle it properly? You’re not alone. This problem is often referred to as “the spendthrift issue” and thankfully, there are estate planning tools available to help you protect a loved one from themselves.
Unfortunately, your best intentions to pass on assets to your loved ones could be afforded by a beneficiary that is not financially responsible enough to manage the receipt of those assets. This leads many older parents to think about what they can do to ensure that an adult child who doesn’t make good decisions will be financially secure at the time of that asset transfer.
Many of the children who might be classified as spendthrifts simply lack self-control or don’t make good decisions. However, there are several things you can do in the estate planning process to protect a child from their self and it just requires a little bit of planning. A trust is one of the most powerful tools that you can use to protect a loved one from their own spending irresponsibility. You leave the money inside a trust which means that the trustee is responsible for preventing the child from having total control over the money.
Within your trust, you can be somewhat creative with the terms to determine whether or not you want to distribute the money over a series of years or distribute the funds quarterly or monthly so that your loved one has a source of steady income. You can discuss all of your options with your trust planning attorney in Maryland today. We’re still here helping clients review existing documents and determine which new ones need to be created.