It isn’t uncommon for people creating their estate plans to face a difficult decision when it comes time to leaving an inheritance to a troubled family member, child, or grandchild. Whether your loved one has a drug addiction, mental health problems, or other difficulties that could hinder his or her ability to manage an inheritance, you need to structure your plan to take this into account. Here are three tips to help you face this issue.
As much as we would love to change or guide our loved ones for the better, sometimes that is not in our power. This is especially true when it comes to inheritances. The prospect of a large inheritance will not be enough to change your loved one’s ways, and you should always be honest with yourself about how that person will be able to manage an inheritance.
Create a trust.
A trust is almost a necessary tool when you have a family member who is not able to manage an inheritance properly. By creating a trust you can still pass on an inheritance but, at the same time, better ensure that the family member will not squander it. Through the trust, a trustee will manage the inheritance for the recipient and do so under the terms that you create.
Proceed with caution.
Creating a trust that will best protect the interests of a troubled family member is sometimes difficult to do. You’ll have to be careful to create specific terms that the trustee can follow while preserving the interests of your loved one. This can be difficult, and you should always speak to an attorney for qualified advice.