If you are doing your estate planning, you may find that some decisions are more challenging to make than others. For instance, suppose you have a much-loved beneficiary who just never learned how to properly manage their money. They may have filed for at least one bankruptcy and seem to hover around the precipice of financial disaster.
Alternatively, you might have an adult child who is married to a financially irresponsible spouse who controls the purse strings. Or maybe a grandchild struggles to maintain sobriety from drink or drugs.
Is there a way to protect them and their inheritance?
One potential option is to fund a spendthrift trust. These are like ordinary trusts but with some key provisions. The main difference is that beneficiaries of spendthrift trusts don’t have access to the trust’s principal. A trustee manages the trust and disburses funds according to your preferred schedule.
Who should you appoint as trustee?
Many trust grantors prefer to appoint a professional trustee to oversee the trust. They are less likely to be subject to the manipulation of a beneficiary and have no pre-existing relationship with them that could be ruined over their role. Whomever you choose should have impeccable integrity and the financial acumen to manage the trust effectively.
Review all your estate planning options
Since no one is guaranteed time on this Earth, it is wise not to put off your estate planning. But you should learn about all the estate planning options that can accommodate your individual circumstances and help protect your beneficiaries’ futures after you have passed on.