You want to leave a substantial amount of money for your adult child to inherit when you are gone. Your plan has always been to provide enough for them to live on for the rest of their lives. However, in the last year, you have noticed that your child is recklessly spending money. They never seem to have enough despite being gainfully employed. Now, you’re uncertain about that inheritance you plan to leave them.
There is a way to leave money to your child and still maintain control so that they don’t use it all up too quickly.
What is a spendthrift trust?
A spendthrift trust provides a means to leave money to your child or beneficiary while ensuring that they don’t use it all up right away. The funds are released to the beneficiary according to the rules you set when you create the trust. A trustee is appointed by you to oversee the dispersal of the trust to your beneficiary.
Should your beneficiary find themselves in some financial trouble down the road, they will not lose the money held in trust. Collection agencies and the like cannot garnish money from a spendthrift trust.
Can a spendthrift trust be broken?
Once a spendthrift trust is established, it cannot be broken. This is a built-in protection plan for the beneficiary who may not have the best financial track record. For example, if you are worried that your child’s penchant for drugs and alcohol will lead them to financial ruin, you can rest in the knowledge that the spendthrift trust is safe from being misspent all at once.
If you would like to set up a spendthrift trust fund for your child, contact an experienced legal guide to assist you with the process.