Beneficiaries of estates may not be prepared to manage what their parents or others may leave for them after they are deceased. There could be mismanagement of the estate or fights over who receives what after their loved one has died. It is important for will-makers (testators) to help their beneficiaries prepare for their inheritance by placing stipulations on how they can spend the money in their wills. Here is what you need to know about protecting your beneficiaries from themselves.
Testators Should Issue the Money in Payments
To control the flow of money a child receives, parents are advised to set up a trust and determine how the money will flow to the child at each stage of the child’s life. For instance, a parent may decide that one-third may be distributed at the age of 25 and one-third at the age of 30. The rest of the money will be distributed at the age of 35. Parents can even distribute the money on an annual basis if it works for them.
Some parents may opt for an annuity rather than a trust. This contract with the insurance company will obligate the company to make payments to a beneficiary. Annuities pay out on a regular basis for a period of time depending on the how the annuity is arranged.
Testators Can Disinherit a Child
Parents are not obligated to leave anything to an adult child. Children have no right to their parent’s estate if they were intentionally excluded, but there are times when younger children may be awarded a part of the estate if the oversight was not intentional. There should be a clause in your will indicating every child that should receive a portion of the inheritance.
Testators Can Put Stipulations on the Money
If you are not confident about your child’s money management skills, you can put stipulations on the money and how it is distributed and used. You can appoint someone as a trustee that will help your child manage the inheritance. Some parents may ask a friend or relative to be the child’s trustee or even hire a professional trustee. This service requires payment, but it is worth the investment if there is no one trustworthy in your family to take on the responsibility.
A trust can be terminated if the stipulations are violated. For instance, if the child has battled an addiction, the trustee could terminate the trust, and the trust can end at a certain age. Any stipulations you want to set can be determined in the will.
Need More Advice on Protecting the Inheritance of Your Beneficiaries?
You can protect your beneficiaries by planning ahead and making provisions that will prevent them from squandering their inheritance. But it always helps to have legal advice from an experienced estate planning attorney, and Andrew Lamkin is just that. His Plainview, New York, law office serves Long Islanders and other New York state residents who are concerned with both providing for and protecting their heirs. Call Andrew Lamkin today at 516-605-0625 for a free consultation.