When people create trusts, the goal is often their own protection. They want to prevent creditors from making claims against some of their property or set aside resources for their senior years that people won’t be able to gain control over through guardianship.
However, trusts can also be powerful tools for protecting individuals who will inherit from an estate, not just the testator. A large inheritance left for your children may be something to be proud of, but it could have a destabilizing effect on their lives.
A trust could be a way to protect your family members from the social and psychological impact of a significant, lump-sum inheritance.
Trusts prevent people from squandering what they receive
Gaining control over a bank account with a six-figure balance could bring out the worst behavior even in those who are usually responsible. Your loved ones might waste their inherited money on vacations or shopping sprees instead of buying a house or investing in the family’s future.
You will be able to limit someone’s misuse of inherited resources when you create a trust. You can place strict rules about when people can access trust funds and for what purposes. Your trustee will help ensure that the funds and assets you set aside for the people you love will go toward a better standard of living or positive uses rather than wasteful spending.
Trusts protect people with a history of poor decision–making
To a loved one who has previously had an intervention for substance abuse issues or who gambles, an inheritance could seem like an open invitation to spend money on those bad habits. When you create a trust and thereby limit someone’s use of inherited property, you can prevent them from backsliding into substance abuse or other dangerous behaviors.
You protect them from unnecessary conflict
People who stand to inherit large amounts from family members may begrudge other loved ones the same good fortune. All too often, large estates wind up in probate court because of family challenges or misconduct. Trusts are harder to challenge and provide an additional layer of oversight to help limit misconduct and irresponsible behavior.
Using a trust as a means of protecting your family can help take the conflict and dangers out of probate proceedings and inheritance for the people that you love.