When you pass your assets along in a will, your estate is emptied. All ownership moves to the beneficiaries. What happens now is completely in their hands. Commonly, this results in a completely depleted estate for the second or third generation after your children.
This can cause a great amount of worry if you’ve amassed considerable wealth. Ostensibly, you worked hard to provide for your family for years to come, only to have it all squandered after you’re gone.
Fortunately, there is another option. If you want your estate to last long after you die, you can build a trust. Here are some ways that a trust can keep your descendants comfortable for generations to come.
Trusts Can Generate Wealth
A trust can continue to function without you. In a way, it operates as a business. You can appoint a trustee or a board of trustees to manage the estate. They can buy and sell property, make investments, and create other means to generate wealth for the estate. If managing the trust is a full-time job, the trustees can pay themselves through the estate. This may motivate them to continue their good work, making the estate even more valuable.
Trusts Can Create Stipulations for Inheritance
Through a will, your property is passed along as quickly as probate allows. Probate is the process that carries out the wishes of a will. Property is held until it clears the transfer of ownership. Once this happens, all assets move along in large chunks. With a trust, you can manage when a person receives their inheritance. For example, you may have a home that you want to pass to your grandchild when they reach 18. Commonly, beneficiaries are put on an allowance. You can choose whatever timeline you wish. They can expect to receive their part of the inheritance every week, month, year, etc.
Perhaps you want even more control over how your assets are distributed. For instance, maybe you want to ensure that your descendants are still working for their portions. You could create stipulations that make your beneficiaries earn their money. Maybe they can only receive their allotment when they’ve held a job for at least three years. After that, they must continue to prove that they’ve had steady work every three years. This is just one example of how you can control the flow of money in a trust. You can also create requirements for how money is used. For example, you could demand that 40% of the funds are for living expenses, but the other 60% must go toward investments or starting a business. There are limitless possibilities for you how to control your estate after you are gone.
Trusts Can Be Altered
Rather than create all requirements yourself, you can leave that job to the trustees. They can decide who gets money, when, and how. Perhaps one of your beneficiaries is having a difficult time managing their finances. They receive their allowance, only to find themselves broke before they come back for more. A trustee can cut them off, changing the original plan. In a best-case scenario, trustees can help nurture and guide this individual. They can create their own caveats, requiring that the beneficiary consistently provide proof of employment before receiving their share.
Trusts Can Be Used Alongside a Will
In estate planning, you are not stuck with either/or scenarios. Perhaps there is property or wealth that would be better passed along through a will. You may have a friend, for instance, that you want to give a lump sum, but you don’t want them to be a lifelong beneficiary. Maybe there is sentimental property that you would rather pass along right away, keeping it from being tied to the trust.
Working With Your Lawyer
When planning your estate, work closely with your attorneys and advisors. Be very clear about your needs and desired results. They can help you create a plan that keeps your wealth intact, securing comfort and opportunity for your family far into the future.
For assistance with estate planning, trust our firm to help. With a free consultation, we can assess your needs, and we may be able to assist you in building a strong future for your descendants. Contact us by calling (916) 299-3936 or filling out an online form.