You spent a lifetime accumulating money and personal property, and you want to leave it to the people you love when you die. Sadly, your children or other close family members have repeatedly shown that they struggle with making good decisions when it comes to money.
If you have family members who have a history of overspending, accumulating debt or gambling, the creation of a spendthrift trust might be the right way to handle your estate plan. When you create a trust, you can retain some control over how people use the inheritance you leave them. Otherwise, they could waste a lifetime’s legacy and have nothing left to show for it.
What’s the point of a spendthrift trust?
Although thrift often means cheap or affordable, a spendthrift is someone who doesn’t know how to manage money rather than someone who only spends money on cheap items. Creating a spendthrift trust usually means trying to protect someone from themselves.
The goal of such a trust is to limit how someone spends their inheritance and how quickly they can go through it. You may use several different structures for a trust, depending on the type of assets you have and whether you want one trust for one family member or one trust for multiple beneficiaries.
When you have concerns about how someone might misuse their inheritance, a trust can be the easiest way to protect people you love from their own bad behavior. A good estate plan considers not only what you want to leave behind but also how other people might use that property when it becomes theirs.