There are many reasons to establish trusts when estate planning. One common reason is that the individual planning their estate has doubts about the emotional maturity or financial responsibility of their beneficiaries. This is particularly the case when it comes to children who are minors or young adults. It is difficult to believe that your nineteen-year-old son who plays Call of Duty in twenty-hour increments has the wherewithal to balance a checkbook, let alone manage your international investment portfolio.
Trust Funds Can Carry Specific Conditions
A trust allows you to secure your assets and place them in the care of a trustee, who becomes legally responsible for distributing those assets in accordance with your wishes. Among the benefits of a trust is that you can stagger payments and distributions over time. These payments may increase as the beneficiary ages (and in theory, becomes more mature). Another key feature of a trust is that it allows you to specify conditions upon which beneficiaries receive their inheritance. Among these conditions, sometimes referred to as incentives or signposts include:
- Reaching a specific age.
- Obtaining a college degree.
- Obtaining a Masters degree or PhD.
- Obtaining a Medical degree.
- Obtaining a law license.
- Working in a specific field.
- Getting married.
- Having a child that carries on the family name.
- Attending weekly therapy for five years.
- Not being arrested for five years.
- Completing inpatient drug treatment and passing drug tests.
There is truly a plethora of examples of conditions that people have placed in trust funds. These conditions need to be specific, so that the trustee can follow your instructions and so the court can enforce these conditions. An attorney can fully advise you about your options.
Keep in Mind, There Are Limits
Despite that this is your money, there are legal limits as to the conditions you place on a trust. In other words, you cannot infinitely micromanage how the assets you place in trust will be limited. In fact, appellate courts have regularly heard challenges and established that you cannot violate any standing laws or constitutional rights when placing conditions on a trust. Examples of this are conditions prohibiting interracial marriage, or requiring that your child divorce that husband you dislike. If you have extreme problems with how a beneficiary lives their life, perhaps it is not worthwhile to leave them assets.
Contact the Law Offices of Robert S. Thomas
If you are considering establishing a trust, contact my office to set up a consultation. Trusts are complex and it is critical to have a thorough and experienced attorney create a trust that fulfills your stated goals. I have handled trust creation, estate planning, and tax law for more than two decades and can help you. Call the Law Offices of Robert S. Thomas at 847-392-5893 to schedule a consultation or visit our website.