How to Leave Money to Your Children When They Cannot Handle Financial Responsibility
If you are reading this post, it means that you have navigated to the website of an estate and probate law firm, which implies that you care about providing your children and their descendants with financial stability. Your desire to give them financial stability motivates you to continue in a stressful job that limits the time you can spend with your family. It is the source of disagreement or disappointment when teenagers make monetary gifts disappear quickly in exchange for frivolous purchases or when young adults squander promising career opportunities. Unfortunately, not all sons and daughters learn from their financial mistakes while their parents are still alive. The good news is that Florida’s estate planning laws contain provisions that enable parents to specify how the money they have designated for a particular beneficiary’s benefit may and may not be used.
Trust Funds Are Not Just for Spoiled Children
The simplest solution is to specify in your will that, instead of going directly to the child, the money will go into a trust dedicated to the financial support of the child. You designate a person other than the beneficiary child as a trustee, meaning that he or she has the authority to dispense money from the trust to the beneficiary or, if your instructions say so, to other parties for the child’s benefit. (For example, if the child has severe disabilities and requires residential care, you can instruct the trustee to pay the required amount to the facility where the child resides.) The beneficiary can be another one of your children (the beneficiary’s sibling), a more distant relative or a charity.
Why Set Up a Trust for Your Children Instead of Simply Leaving Money to Them?
You should leave assets to a trust, naming your child as a beneficiary, instead of leaving the assets directly to that child if he or she is unable, because of age or health, to make financial decisions or if your child’s life history leads you to fear that he or she will use the inheritance unwisely if he or she receives it as a lump sum. If your son or daughter is a minor or a young adult when you write your will, you might specify that he or she should receive the money, all at once or in annual installments, upon reaching a certain age (for example, 25, 30, 40, or whatever age you feel is appropriate). In the case of adult children with a poor financial track record, you can simply designate an annual payment for them, enough to survive, but not enough to create bigger financial problems. You can also impose conditions such as staying employed or avoiding further criminal convictions. You can even specify that the payment amount will be based on your child’s income.
Reach Out to an Attorney for Help
Leaving assets to your heirs through a trust can help ensure their financial stability in ways that simply giving them free access to their inheritance cannot. Contact Mark R. Manceri in Pompano Beach, Broward County, Florida to discuss your questions with an estate and probate lawyer.