You’ve been thinking about disinheriting one of your family members, specifically because you don’t trust them to handle that inheritance properly. Maybe they’ve struggled with drug addiction issues in the past, or maybe they just make frivolous purchases on a consistent basis.
For instance, say that you have a significant sum of money to leave to one of your extended family members, but they’re only 18 years old. Technically, they can inherit it from you. But you’re considering disinheriting them because you think they will just waste the money.
Setting up a trust
One alternative method to consider is putting the money into a trust. When you do this, you can sometimes protect it from a problematic beneficiary, but you do still get to leave them an inheritance.
For instance, you may want to create the trust for a certain purpose, like covering that person’s college tuition costs. You simply leave instructions for the trustee. The beneficiary themselves isn’t allowed to make withdrawals. They just get the money when they need it from the trustee, or that trustee may even have the power to pay their college directly.
Another option is to allow the problematic beneficiary to grow up a bit. Maybe they’ll make poor choices at 18, so you set up a monthly stipend. Say that they get $1,000 every month until they turn 25, when they have access to the rest of the funds. They still benefit from their inheritance, but you keep them from wasting all of it immediately after receiving it.
These are just a few things to consider when making an estate plan. Take the time to carefully consider all of your legal options.
