Do you have a beneficiary who has had some financial struggles in the past, perhaps due to their decision-making? For instance, maybe they are an easily defrauded person. They have been scammed by online phishing scams or telemarketing scams on a consistent basis.
As such, you want to leave this person an inheritance, but you are worried that they are just going to lose the money. They are going to invest it all in the latest crypto scam or something of this nature. How can you give them access to the funds in a way that will be beneficial, while protecting them from these types of issues?
Keeping the money in a trust
There are many potential tactics to consider, but one is simply to put the money into a trust and name that individual as the beneficiary. You then appoint a trustee to authorize distributions.
What you are doing here is putting a gatekeeper in between the easily defrauded individual and their funds. The trustee has to approve the withdrawals. You trust them to use their judgment to determine when the money is being used for a legitimate purpose and when there could be a threat of fraud. They have nothing to lose or gain because the trustee themselves can’t take money out of the trust fund, but they simply act in a way that protects the beneficiary from their own decisions.
As you can see, trusts can be very powerful estate planning tools. Take the time to carefully consider all of your legal options while writing your estate plan and focusing on your family’s future.