If you have one or more heirs with unhealthy spending habits, providing for them after your death comes with many challenges. You want to leave them enough to live on or help them through financial hardships while keeping the bulk of their inheritance protected.
Adding trusts to your Riverside, California, estate plan is an effective way to provide for your heirs and help them control their spending. Even better, you have customization options when creating trusts that reinforce your wishes.
Two trust options to consider for your spendy heirs
We all hope our young loved ones will grow into financially responsible adults. However, hope does not always make our wishes come true. It is always wise to plan for family members that cannot seem to grasp the finer points of fiscal responsibility. The two trusts below can help your heirs and beneficiaries avoid wasting their inheritance:
- Spendthrift trust. With this trust, you can retain a measure of control over the inheritances you leave behind. Your heirs cannot pledge away or sell off the assets held in a spendthrift trust. It also protects the assets from creditors for the life of the trust.
- Incentive trust. Like the spendthrift trust, the incentive trust keeps its assets safe from creditors. Further, it prevents your heirs from extracting funds until they have fulfilled whatever conditions you choose to impose. For example, you can mandate that an heir graduates from college with a degree before accessing the funds.
The examples above are just two ways to address overspending in your plan. Before you decide the ideal way to achieve your estate planning goals, we recommend familiarizing yourself with the laws that govern California trusts and estate plans.