Just Because You Love Them Doesn’t Mean They’re Good With Money
Happy Wednesday!!! Now that Fall is upon us and people are settling back into their routines, our seminar season has commenced. Last Thursday, I had a full house at the Norfolk Public Library and we have other events coming up. Be sure to check out our events to see where Jason and I will be speaking at in October and November.
This week we are talking about money and personal responsibility. Let’s face it, sometimes the ones we love aren’t necessarily the best with money. Frequently, I am asked, “how do I make sure my kids don’t blow their inheritance?” It’s actually a complicated question. Besides education, and encouraging personal responsibility, typically people with this concern will leave their children’s inheritance in trust. This prevents the child from going to the bank and doing whatever they’d like with the funds. Below are a few key estate planning techniques you can utilize in your trust to provide the greatest protection for your children.
Make somebody other than your child the trustee: Just because you leave money for your child does not necessarily mean that they should have free access to those funds at any time. Choose a Trustee that you believe will be fair and reasonable and is willing to distribute your child’s funds when, and only when, appropriate.
Consider using a H,E,M,S Standard: Health, Education, Maintenance, and Support – Be sure your trust states that your children may only have access to their trust funds for purposes of their health, education, maintenance, or support. This prevents the Ferrari in the driveway or the crazy around the world vacations.
Distribution Blocking Provision: These typically state that if your child is ever addicted to drugs, alcohol, gambling, is being sued, or is at risk for a divorce, that the Trustee may not pay out and must halt distributions until the threat passes. This is a very effective way to ensure your money isn’t squandered on addiction or a law suit of any kind.
If you are concerned that your children, or any beneficiary for that matter, cannot handle an inheritance, you should be sure that your trust has these above mentioned features. You’ve worked hard so that there is an inheritance, you want to be sure that it doesn’t disappear instantly once you’re gone.
If you want to be sure that your estate plan is protecting your legacy to its fullest, please contact us today.