Parents thinking about what happens to their children when they die often put a lot of careful consideration into the inheritance they leave for each child. Your plans can serve as a final reminder to your children of how much you love them. The inheritance they receive will be a legacy that potentially reminds them of you for the rest of their lives.
Unfortunately, sometimes the assets you want to pass to your children can cause as much harm as good. Creating a trust so that your child does not have direct control over their inheritance can be a good decision in certain scenarios. What situations with your children might make an estate trust a smart decision?
A history of drug abuse
If your child has caused a drunk driving crash before or gone to jail for habitual drug abuse, you may recognize that an inheritance might only contribute to their worst behaviors. It is possible to create a trust with rules that will prevent someone from using trust assets to purchase drugs or alcohol. That way, you can leave resources to support a child struggling with addiction without worrying that you might contribute to their future overdose or arrest.
A terrible relationship with their siblings
Sometimes, it is not an issue with one child but rather a problem with the family dynamics that makes a trust the best solution. If your children are likely to end up in a messy, protracted dispute about the assets in your estate or if you worry that one might use their authority to undermine your wishes, a trust can make it harder for estate litigation to undermine your actual estate wishes.
A disabling medical condition or a very young age
There are situations in which your child will not be able to manage their own inheritance. Either they are not yet a legal adult or they have a medical condition that will prevent them from gaining true independence.
A Special Needs Trust is a useful tool for an adult with health concerns that necessitates supervision by another adult. Younger children can also benefit from a trust because it can hold resources until they turn 18, thereby protecting them from misuse by the guardian caring for your children.
Learning more about trust can help you decide if you want to add one of these powerful tools to your estate plan.