When you set up a trust as part of your estate plan, you pick a trustee. This person is in charge of authorizing and distributing payments to the beneficiary. The beneficiary may have no ability to access the money on their own.
These trusts can be designed with a specific purpose, such as paying for college tuition. But they can also be set up so that the trustee is allowed to use their discretion to decide what the money should be used for and when they want to authorize those payments. Why would it be better to give the trustee this freedom, rather than spelling out your wishes specifically?
You can’t predict the future
The big issue is that the future is rather unpredictable, and things may happen in a way you hadn’t anticipated. If the trustee has the legal ability to make decisions, they can address these changes and do things that you would have wanted. If the trustee does not have this ability, then they would be bound by the rules of the trust.
An example of this could be if one of your heirs decides to start a business as soon as they graduate from high school. If you put the money in an educational trust that is only for college tuition, they can’t use it to fund the business. But it may be very clear that starting their own business is a much better use of their finances, and a trustee who has been given the proper permissions could allow this type of spending.
This is just one of many things you want to think about when setting up a trust. Be sure you know what legal steps you’ll need to take.