A common misconception amongst Californians is that estate planning is reserved for those who have reached the later stages of their lives. Although older individuals should ensure that their estate plans are suited to their wishes, younger people can and should utilize the estate planning tools at their disposal, too. Those who realize this often turn to a simple will to ensure that their bases are covered, but those who have children may be leaving their estate vulnerable by doing so.
Simply put, assets that are left to a minor child are inherited outright when they turn 18. On its face, this fact may not seem concerning, but when examined more closely, many 18-year-olds are simply unequipped to adequately manage inheritances. For these young people, an inheritance may seem like it is going to last longer than it actually will, thereby spurring them to spend recklessly.
Although some children who inherit wealth are able to appropriately manage their newfound assets, those who are leaving those assets can take steps to better ensure the long-term viability of that wealth. One of the best ways to do so is to utilize a trust. Not only can an individual place terms on the distribution of trust assets, thereby controlling a beneficiary’s behavior to a certain extent, but a trustee can work with a beneficiary to determine a way to protect the trust’s principal, generate an income stream through interest, and help the beneficiary acquire financial literacy.
There are a wide array of trust options available to estate planners. Choosing the right one requires knowledge of how these trusts work and how each may be advantageous or disadvantageous to one’s position. A competent estate planning attorney may be able to help with this process, which is why those looking to preserve their wealth for their children should consider working with one of these professionals.