As you do your estate planning, the bulk of the work you do just distribute your assets to your children. Maybe you have financial assets in investment portfolios, or maybe you’re distributing physical assets from your home. It’s most likely some mix of both, as you try to pass what you own on to the next generation.
But simply writing in your will that your child gets a certain amount of money or a certain asset doesn’t give you much indication of how they’re going to use it. Maybe you’d like to leave enough money to one of your children that they can put their own kids through college or so that they can start a business. But you’re worried that they’re just going to take a vacation or buy things that they don’t need and couldn’t afford otherwise. Is there any way that you can control how they use the money and assets you leave them?
Putting assets in a trust
There are different ways to do this, but you generally can’t do it with a will. If you simply leave money to someone in the will, even if you tell them what you would want them to do with it, they have full discretion to use the money in any way that they want.
Instead, you may want to put the money into a trust. By using a trust, you can then outline how the assets in that trust are to be used in the real world.
For instance, you could put the money in the trust for educational expenses, telling your heir that they can only use it for things like college tuition or room and board while they go to class. You could also put the money in a discretionary trust and choose a trustee that you believe will hold your heir accountable and make them use the money in a productive manner.
No matter what type of trust you choose, it is going to give you a little bit more control than a will. If that’s something that you’re interested in doing, take the time to look into all the legal steps you’ll need to take to set up this type of estate plan. It can be a bit more complex, but it can get you the results that you’re really after.