If you decide to use a trust for your assets, it can prevent the children from using those assets in the way that they want. For instance, a trust could stipulate that the child does not get any money until age 30 or that the money has to be used to pay for college tuition.
The reason that parents do this is often to keep children from spending all of the money too quickly or in a manner they do not approve of. They want to have some control over their children’s lives. This may be simply to protect the kids — understanding that an 18-year-old may make regrettable decisions that a 30-year-old would avoid, for instance.
However, to make the process go more smoothly, it is important for parents and children to sit down and have a discussion about why certain decisions were made and why the trust was created. This gives the children a sense of their parents’ goals, and they get to ask questions and seek clarification.
“For families wishing to go further in protecting their beneficiaries from a blown inheritance, it would very beneficiary for the parents to walk their children through the estate plan after its creation and explain why the will or trust is being set up in such a manner,” one expert noted. In some cases, this can also reduce the chances of an estate dispute.
As a parent, it is important to really look into all of the options that you have. Make sure you know how you can protect your wealth and help your children have the future you’ve always envisioned for them.