You worked hard all your life and amassed a decent estate to leave to your heirs and beneficiaries. Yet, you have some real concerns about one of your heirs. You love them dearly and want to provide for them after you’re gone.
But one heir is quite ill-suited to manage their inheritance. That became evident over the course of his lifetime as he struggled with substance abuse and alcoholism. Is there a solution?
Spendthrift trusts can be used in an estate plan
One potential solution is to fund a spendthrift trust for your relative. The trust’s principal remains inaccessible to the beneficiary and is controlled by the trustee you appoint to manage it. The trustee then pays out disbursements at predetermined intervals you specify from the interest generated by the trust.
Will your beneficiary resent the restrictive nature of the trust?
He certainly might. However, you have the right to leave your money and property to whomever you choose under the terms you deem best. He will still get the money, of course. But it won’t be squandered recklessly or diminished by collection efforts of creditors. The funds also won’t be wiped out by civil judgments to defendants injured in drunk driving collisions caused by your beneficiary.
Don’t kill them with kindness
Leaving large sums of money to addicts and alcoholics without barriers in place may set off chain reactions of crises. Those could even prove fatal to your heir or those he hits when driving drunk. You certainly don’t want that.
Weighing all your estate planning options will help determine the best way to protect your loved ones and responsibly provide for their financial future when you are gone.