Sometimes a large influx of cash can be mishandled by an heir. Whether it is due to irresponsibility, or financial ignorance, the truth is that it does happen more often than you might expect.
If you would like to leave money to an heir who is not able to be responsible with the money, or who is perhaps too young, then you can use a delayed inheritance trust. With a delayed inheritance trust you can control the time and amounts of money which are released from your estate after your death.
As with other estate planning issues, delayed inheritance trusts come with both positive and negative aspects.
Positive Aspects of Delayed Inheritance Trusts
The two positive aspects of using a delayed inheritance trust are that they
- allow you to set all of the transfer rules
- keep your assets safe for upcoming generations.
When you set-up your trust, you can determine who you would like to leave your assets to, as well as when you would like them to inherit those assets. A good example of when this type of trust is necessary would be a parent who wants to leave money to a minor child. Additionally, if you have a son, or daughter, who is in their 20s and still struggling to get on their feet then delaying their inheritance will give them more time to grow-up before having to responsibly handle a large sum of money.
The other positive aspect of using a trust is that you can skip generations and hold your assets in the trust for later distribution to grandchildren or great-grandchildren.
Negative Aspects of Delayed Inheritance Trusts
The two negative aspects of delayed inheritance trusts are
- the trust will need to have a paid administrator
- distribution rules out of the normal may cause animosity.
If you choose to leave your IRA account to your children and wish to have it held for the next thirty years, then you will have to pay someone to look after your money for all of those years. While this simple example would not be terribly costly, setting-up very complicated rules and distribution schedules will result in higher administrative costs for the trust.
If you are going to set-up this type of trust with your attorney, then you are advised to speak with your heirs about the decisions that you have made. This will go a long way towards reducing problems with other heirs later down the line.
If you are considering the use of a delayed inheritance trust, any local estate attorney can certainly advise you. By making a legal, written plan with your attorney, one like Albert & Slater PS, you can rest assured that your estate will be taken care of according to your wishes.Share