People in California may have seen a recent news editorial on the topic of leaving inheritance to children and other heirs. Everyone wants their future generations to thrive and prosper even after they are deceased, but how can a person make sure their children are going to use that money wisely and not blow it immediately on wasteful spending?
By consulting with an experienced estates and trusts attorney, parents can ensure peace of mind that their money is going towards the purposes they designate and nothing further. Many are already taking this step as about 35% of all people surveyed say they will be placing restrictions on the way their beneficiaries will spend their inheritance.
People who want to leave financial assets to their children may want to consider setting up a trust for their children's benefit. There are many different types of trusts, which can be an effective way to avoid excessive taxation, but can also provide specific requirements for how the money is to be spent. The great thing about a trust is the requirements of the trust must be met in order for the beneficiary to spend the money. For example, the trust may stipulate that the child may receive a certain amount of money upon graduating high school, another amount upon graduating college, and perhaps the remainder can be used to purchase a first home or start a business.
Another important aspect of setting up a trust is hiring a trustee to administer the trust. Some people choose a family member they know and trust, and may give the trustee significant leeway to use their judgment in the administration of the trust. Some people decide to use their attorney as trustee, since the attorney may have a better grasp of legal knowledge as well as insight into the goals and objectives of the trust.
Source: CNN Money "Keep your kids from blowing their inheritance," Kerri Anne Renzulli, Nov. 21, 2013