One potential problem you could run into when drafting your estate plan is that you think some of your money is going to be wasted by the beneficiaries. Perhaps you have a specific beneficiary who has problematic spending habits. They are constantly accumulating debt or spending money on things that they don’t need.
You would prefer that they use your money for necessary purchases. Maybe you want the beneficiaries to use their inheritance to retire, to buy a family home, to start a business or to go to college. You want to ensure that the beneficiaries don’t waste the money that you have spent decades saving up. How can you do so?
Utilizing a trust
One of the best ways to accomplish this goal is to use a trust. You can set it up with a trustee who is given full discretion to decide how to spend the money. You just need to choose a trustee that you can count on more than the beneficiary. You leave this other person in charge of the spending decisions so that your money can still do good for the beneficiary – protecting them from themselves.
Another option is to create the trust with a certain goal in mind. For example, you can leave instructions saying that the beneficiary is not allowed to spend the money on anything except college-related costs until they graduate. This way, you ensure that they get an education, while still giving them the flexibility to spend as they wish afterward.
No matter what you choose to do, the key is to create your estate plan in advance so that your wishes are followed. Carefully take the time to consider the necessary legal steps.