When your children are still young, you can protect them by putting their inheritance in a trust. There will be resources available if their guardian struggles to provide for them, but there will also be rules that prevent the guardian from abusing and using up their inheritance before they turn 18.
Parents are less likely to consider using a trust for the inheritance of an adult child unless that child has special needs. However, there are numerous personal circumstances that would justify using a trust to pass a legacy on to your children.
A history of addiction
Substance abuse can run in families, and it can also be a response to trauma. Regardless of the underlying cause of the behavior, abusive alcohol consumption and illegal drug use endanger someone’s freedom and even their life.
If your family member who has long struggled with chemical dependence receives a large inheritance at the same time they must struggle with the emotional consequences of losing a loved one, their inheritance could very well go to fun those self-destructive habits. Putting the inheritance in a trust ensures they can’t convert what you leave for them into their next series of fixes.
Problems with gambling
A little bit of gambling can be a source of excitement and fun on vacation perhaps. However, some people don’t know when to stop and feel the need to continue placing bets to recover the money they have previously lost.
Compulsive or addicted gamblers might take advances on their paychecks or place liens against their personal property to play another round of blackjack. If you don’t want your child’s inheritance to end up pumped into slot machines, a trust can be a way to limit how they use what they receive from you.
An unhappy marriage
You may not have felt like it was your place to speak up about your child’s unhealthy marriage, despite having concerns for years. However, you know for certain that you don’t want the inheritance to go to their spouse if they get divorced later. Putting an inheritance for your child into a trust can help ensure that their spouse won’t be able to lay claim to that property if they divorce.
Creating a trust as part of your estate plan gives you more control over the impact your legacy has on the people you love.