Parents often want to give their children every opportunity in life, so they often want to leave their children a decent inheritance. Many adult children count on receiving an inheritance eventually to help them pay off student loans or fully fund their retirement accounts.
Unfortunately, a large inheritance may sometimes do more harm than good. When an adult child has a history of substance abuse issues, including alcoholism or drug abuse, a large windfall might end up going to fund their worst habits.
If parents worry that an inheritance would do more harm than good, a trust might be a decent solution for their estate plan.
Trusts can limit the use of resources
When a child is a beneficiary in a will, they receive certain property and have total control over those assets after the testator dies. It isn’t hard to understand why this could lead to a very dangerous situation. Thankfully, parents don’t have to choose between funding an adult child’s substance abuse and disinheriting them.
They can create a trust to provide resources in a structured way. Limiting what someone can use resources on, such as educational costs, healthcare expenses or other basic needs, is one way to prevent the abuse of an inheritance with a trust. Having a trustee make the payments directly to another party instead of distributing resources to a beneficiary can add an additional layer of protection.
Parents can leave meaningful support for their children without worrying that it could actually do them harm. Learning more about the different estate planning options available for those with complex family situations may give someone peace of mind about what will happen when they die.