HOW DO WE PROTECT YOUNG ADULTS FROM MISSPENDING THEIR INHERITANCE?

Let's say that you and your spouse and your adult child die together in a car accident. Your grandson, who is now 16, as your adult child's heir will get all of his inheritance at age 18, only two years from now. That means that an 18 year old could get full control over, for example, a half million dollars, to spend any way that he pleases. A large sum of money like that in the hands of a teenager can ruin their lives. Unfortunately, I've seen it happen. With a Living Trust, you can decide on the age at which that person would receive his or her inheritance. I usually recommend to clients to pick an age such as 25 and then additionally, it can be sprinkled over a period of time such as 10 percent a year for 10 years or 5 percent a year for 20 years. That way the child has time to mature before all the money can be received and spent.

If before the age of 25 the child needs money for, let's say education - it is there for your backup trustee to use for that purpose. My favorite example that I give to clients is - let's say that at age 22 your grandchild is accepted to Harvard Medical school. Your grandchild shows the acceptance letter to your backup trustee and asks if they will be able to go to Harvard. Your backup trustee, after checking the trust and the assets available determines that yes, there is enough money to pay for Harvard medical school and shares the good news with your grandchild. You see, your backup trustee acts as a financial parent. They can spend your grandchild's inheritance in the trust for that person's health, education, or living expenses much the same way that a parent would.

Additionally, if you were alive you could use your money for such beneficiary to help pay for a wedding, a down payment on a house or another purpose that would be in their best interest. Here, your hand-picked backup trustee can make these decisions to handle a future that you cannot anticipate.

David J. Bernstein is an Attorney in practice since 1983, concentrating on estate and tax planning. The primary focus of his practice is the preparation of Living Trust Arrangements and Nursing Home Estate Planning. He received his bachelors degree in Accounting from Kent State University and his Juris Doctor of Law degree from the University of Akron. He is a frequent lecturer on Living Trust Arrangements. For a free copy of his one hour video taped seminar on Living Trust Arrangements, call David J. Bernstein at 440-349-4889.

For a FREE copy of his one hour video taped seminar on Living Trust Arrangements, call David J. Bernstein at:

 440-349-4889

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Seminar on Living Trusts CLICK HERE!