If a parent has concerns that a child may have a hard time managing money or other forms of inheritance, it may be a good idea to look into creating a trust. A trust can put limitations on how and when a child receives assets and how they may be used.
Parents who do opt to create a trust for one child but not the other may want to name a neutral party as the trustee. This may reduce the odds of fighting between siblings or other family members after the parent passes on. Anyone from a family friend to a professional financial adviser could be named as a trustee. Since trusts can be as flexible as necessary, parents can arrange for children to receive a fixed amount of his or her inheritance each year. A trust may also be written to allow the trustee to decide how and when to distribute an inheritance.
There are many benefits to creating a trust beyond the ability to protect assets after passing. Property that is placed in a trust is typically held outside of the estate. This means that it can avoid probate. Beneficiaries will therefore be able to collect their inheritance in a timely manner and with fewer possible legal challenges. Another benefit is that trusts allow for greater privacy.
Those who don’t want the public to know how much they are worth when they pass may want to create a trust. An attorney could be helpful in creating one from scratch or reviewing an existing document to ensure that it still meets an individual’s needs. Revocable trusts may be changed as needed if life events such as a divorce make it necessary to do so.