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
Author, President and Founding Attorney
Parman & Easterday