CA Estate Planning Blog

Thursday, April 25, 2019

Preventing Your Heirs from Mismanaging Your Funds

Can I control how my heirs manage their inheritance?

Some of us may have loved ones that are less than financially savvy.  Perhaps one of your children has a history of making poor financial decisions, or maybe your spouse struggles with bad shopping habits.  Whatever the situation may be, you could understandably fear for how your heirs may manage the funds you leave them after your death. Fortunately, there are steps you and your experienced estate planning lawyer can take to protect your assets even after your death so that your hard earned funds are not squandered.

Consider a Trust

To maintain some semblance of control over your assets upon your death, setting up a trust is your best option.  With a will, once your assets are distributed, your heirs will have full and complete control. This means that an heir with poor money management skills could conceivably burn through their inherited funds without you having any say in the matter.  A trust, however, allows you to have ongoing control over the funds because you can create conditions for distribution of assets, stagger the distribution of assets, and appoint a trusted trustee to manage the assets for the benefit of the eventual beneficiaries.

Trust Benefits

A trust gives you great flexibility in the distribution of your assets.  With a trust, the assets within it will generally be protected from your heir’s creditors during your lifetime.  Upon your death, the assets will be managed by an appointed trustee. Your trustee should be selected with care, as he or she will be the in charge of managing your assets to preserve the principal and grow your investments.  

Consider writing conditions into the trust that might preserve your assets.  You can make the trust so that your children do not receive the funds until they are in their late 20s or early 30s, at which time hopefully they have achieved fiscal responsibility.  You could stagger distributions. You could even put incentives, for instance offering funds matching what an heir earns or cash incentives for achieving certain grades. The possibilities are endless.  Discuss your goals and concerns with your estate planning lawyer for more help creating your ideal trust.

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