While planning for your estateaddresses many concerns, likely providing your loved ones is at the top of thelist. But what if you can fully trust your loved ones to use your gifts wiselyand to take care of themselves responsibly? One common alternative is to cutthose problem cases out of the will through disinheritance. Nevertheless, as arecent NewYork Times article points out, those problem cases are all the more reasonto make proper estate plans to protect your legacy and to use the inheritanceto promote positive change.
Problem cases for inheritancesarenâ€™t all â€œproblemâ€ children. You know, the gamblers, the drug addicts, andthe habitually irresponsible within our families. Oftentimes, the risks to aninheritance do not necessarily originate with the problem child, rather theproblems find the childâ€¦ and their inheritance. Classic examples of inheritancepredators include divorces, lawsuits and bankruptcies.
Indeed, much of the time theconcern is just over the possibility of future problems, ones you canâ€™t foreseewhile planning your estate today, especially when youâ€™re planning with youngchildren in mind. However, the form of the inheritance can help curb presentproblems and work to avoid future ones by instilling character.
How can you do it? The mostpowerful tool is the trust for a variety of reasons. At the most basic level,the trust allows limits. Regardless whether money is the cause of the problems,itâ€™s certainly not going to help. A trust can limit the access your loved onehas to the money, while still ensuring it is available when they truly need it.
Within the concept of a trust,there are many varieties and options to address nearly every concern. Forexample, there is the â€œincentive trust.â€ This trust still restricts funds, butwill make funds available if the beneficiary meets certain stated objectives. Aclassic example may be remaining drug-free for a certain number of years. Onthe other hand, it can be a character-building trigger like admission to acertain college or graduation from one. In short; the triggers can be justabout anything. Experience has demonstrated, however, that this approach ismost effective when you are upfront now about rules of the road regarding thecorrelation between future conduct and availability of the funds. Take theopportunity to pass along your positive values, rather than just set up a futuregotcha program for a loved one to â€œgameâ€ after you are gone.
For those planners who take a uniquely longview, there also is the option of the â€œdynasty trust.â€ It has all of thebenefits of a trust, but extends those benefits across as many generations aspossible, for as long as the funds last (according to current law), and, quiteliterally, works to form dynastic wealth. That means that using one properlycan mean protecting the family assets from problem inheritors for severalgenerations.
For more information on this and otherestate planning subjects, contact IdahoEstate Planning and schedule aconsultation. Remember,good planning is no accident.