Texans who are crafting an estate plan might want to keep the document as simple as possible and give their heirs their inheritance immediately. This is especially true when the testator has adult children and believes they are of sufficient education, age and maturity that they can handle the inheritance which, in some cases, might be substantial. Leaving the assets to the adult children outright is what is frequently done. Trusts are generally perceived to be for children under the age of 18 and those who need special assistance. But trusts can also be valuable for adult children.
Financial wisdom is not based on age, but on experience and knowledge. Some adults might not be completely aware of how to handle money, particularly a large amount of money and assets. A person leaving assets to adult children can use a trust to ensure that the finances are competently managed by a qualified person so it is not lost by the inexperienced adult child. While it is possible for the adult child to handle this on his or her own by seeking an advisor, the testator could have someone he or she trusts to handle the finances. Mistakes can be made with hiring someone even if the adult child is legitimately trying to be vigilant. A trust can avoid this.
The testator should assess the adult child’s ability to manage the assets. It is wise to think about the adult child’s history and determine if he or she thinks for the future or is more today-oriented. A trust can keep an impulsive heir from making mistakes that can be costly for the long-term. Annual distributions can be limited to certain amounts. That can prevent big purchases with little long-term value. If the adult child has a history of addiction, this is also a reason to consider a trust. The reasons for thinking about a trust are many and parents who are concerned about an adult child’s future would be wise to assess the situation and make an appropriate choice.
If a parent is thinking about a trust for any reason, it is a foundational aspect to have legal assistance with the entire estate planning process. A law firm that has vast experience in assisting clients with comprehensive strategies to cobble together an estate plan is key. That includes knowing the types of trusts available and using one if it is applicable and the testator deems it necessary.
Source: forbes.com, “7 Big Estate Planning Mistakes: Leaving Assets Outright To Adult Children,” Bob Carlson, March 6, 2018