Most people know that there are two basic options to leaving an inheritance: you can place the funds into a trust for the benefit of a loved one or give the individual the inheritance in a single lump sum.
Now, for older heirs who have demonstrated an ability to manage money, leaving a lump sum might not be a bad idea. But for younger heirs or those that struggle to handle their financial affairs, a trust is often the best choice. This allows you to designate a third party trustee to literally “manage” the money within the trust, making regular monthly, quarterly or yearly distributions and ensuring that the heir doesn’t squander away their inheritance in the first few months.
But money management isn’t the only perk of having a trust. You can also set goals and guidelines to help the heir achieve a more financially independent lifestyle.
For example, you can require the beneficiary to attend college and maintain a minimum GPA in order to receive their monthly distribution. You could also require that they hold a regular job and then match the amount they earn in a salary with an equal amount distributed from the trust.
In fact, you can create any kind of incentive you want within the trust as long as it does not require the beneficiary to break any laws.
If you’re interested in the possibility of creating a trust for the benefit of a loved one, we would be glad to assist you. You can set up an appointment to speak with us by clicking this link: Free Oklahoma City Estate Planning Consultation
Larry Parman
Author, President and Founding Attorney
Parman & Easterday
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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