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Using trusts to protect assets from adult beneficiaries

People in Tennessee may make a grave error if they leave their assets outright to their adult children without considering whether their offspring have the financial maturity needed to properly handle the wealth they receive. Just because someone is a particular age does not mean that he or she possesses financial sophistication. It is important that individuals consider the risks associated with leaving inheritances directly to adult children and the benefits of using a trust as a vehicle for the inheritance.

A common goal for wealth is to see to it that it will last for years for multiple generations. Having the wealth professionally managed can help this goal be realized. While an adult child who has been left his or her inheritance outright may see the wisdom of hiring a financial advisor to assist with managing the wealth, he or she may not be wise enough to choose the right person for the job.

Using a trust can allow parents to create rules that dictate how distributions are issued. They can choose to allow annual distributions that consist of only a fraction of the trust’s value or just investment income. Other parents may give the trustee the authority to decide how much the distributions should be based on the best interests of the beneficiaries.

Trusts can also be created so that the distributions can be paused in certain situations. For example, a trustee may find it prudent to temporarily stop the distributions to a beneficiary who is heavily involved in illegal drugs or has a gambling addiction.

An attorney who provides estate planning and probate law services may assist clients with creating an estate plan that could preserve their assets. Clients may be advised how certain types of trusts can be used to protect assets from irresponsible beneficiaries and any creditors that the beneficiaries may owe.

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