When making an estate plan, you may find yourself wondering how that inheritance is going to be used by the next generation. You may hope that the beneficiaries will use the money for things like starting a business, buying a family home or getting a college education.
But there’s no guarantee that that’s actually going to happen. If you simply leave financial assets to beneficiaries in your will, once they have received those assets, they can generally use them in any way that they wish. But if you have specific desires or things you’d like to accomplish with your estate, how can you gain more control over their future decisions?
Putting the money in a trust
One option is to put the money into a trust that has been designated for a specific purpose. An example could be setting up a fund to pay for a beneficiary’s college tuition. The trustee knows that they can only authorize payments for college-related costs until that beneficiary graduates, when they are given the remaining balance of the trust.
Even if you don’t have specific goals in mind, you can still use a trust to ensure that your beneficiaries make decisions you would approve of. An example of this would be a discretionary trust. The person you choose as the trustee has full discretion to authorize payments, and they understand the types of things you would like the money to be used for. This provides a greater degree of flexibility than earmarking those funds for something specific, like only a college education.
No matter what your goals are, there are generally estate planning tools that you can use to accomplish them. Just be sure you know what legal options you have.