You’re proud of your net worth, and you’ve spent decades amassing a nice amount of wealth for yourself. You’re not on the Forbes list, but you’re doing far better than the average person, even in New York.
Now you’re working on your estate plan, though, and one heir in particular concerns you. They’ve always wasted money, spending it frivolously. You want to leave them the same amount as your other heirs, but you can’t stand the thought of them losing everything in the next year. It’s still your money, after all. What can you do?
Various types of trusts exist to fit different situations
There are numerous ways to address this using trusts. For instance, a general spendthrift trust puts a third party in charge of the inheritance, which is kept in a trust. That trustee can then use it on your heir’s behalf, making decisions about the best ways to spend the money, but your heir has no direct control. They cannot waste it.
Another option may be a trust for a very specific purpose. You could set the money aside for them to go to college or buy a house. You still leave them the money, just like the other heirs, but you get to dictate what they buy — at least in a general sense.
Finally, you may consider a trust that only releases a small amount of money every year. For instance, maybe it basically gives them a salary of $100,000 per year. They can certainly waste these smaller amounts, but this at least spreads the money out and, hopefully, they’ll be more responsible as they get older.
Creating the right plan for you
A situation like this can be complicated and even emotional. Consider all of your options carefully. You may have more ability to control your estate than you realize.