When deciding how to distribute assets to your heirs, do you find yourself wondering how your heirs are going to use the money? Maybe you don’t care enough to create an official trust that guarantees it has to be used for one specific thing, such as a college education. But you are still worried that one of your heirs in particular will be more likely to waste this money in ways that you wouldn’t have approved of.
Certainly, one option could be to cut this heir out of the will and not leave them the money in the first place. Many people do choose to do this. But if you would still like that person to inherit, a better option may be to use a spendthrift trust.
Removing direct access
The benefit of a spendthrift trust is that the person that you’re leaving the money to doesn’t actually have the access to it that would allow them to spend it as they’d like. They have to go through a trustee. This is a person that you choose, and they get to approve the way that your heir will use the money. Without this approval, the heir cannot withdraw money from the trust.
In other words, you may know someone else who is willing to help and who will make much better financial choices. You still want the money to help your heir do things like start a business, buy a house or go to college. You just need to set things up so that this other individual has a say in the way that the money is used and can ensure that it will not go to things that are overly frivolous.
Creating a trust can be more complicated than simply writing a will. That’s why it’s important to know what options you have and what steps to take.