Russ Cook & Associates, PC

You can create a trust to manage your adult child's inheritance

As a parent, you want to provide for your child, even when he or she is an adult. When creating an estate plan, it is important to analyze your child's strengths and weaknesses, and take a long hard look at your child's ability to manage money. If you have a large estate and your son or daughter has an unhealthy relationship with spending, establishing a trust may be in your family's best interest.

Estate planning for grown kids

Whether you are on the fence about your child's ability to manage money or just want to put financial protections in place, a trust can accomplish those goals. With a trust, you can choose how and when portions of your child's inheritance are paid. Common examples of major life changes include:

  • College tuition: Your trust can include instructions for payment of tuition, books, living expenses and other college-related costs and can require that your adult child submit receipts. Be specific that these only include educational needs, not weekend partying.
  • Marriage: You can set financial parameters for your child's wedding costs. One way is to prioritize specific family-connected wedding planners and companies. If your child prefers to organize the ceremony and events independently, indicate a spending cap.
  • Home purchase: A house can be an excellent investment and can provide a way for your child to develop an as adult. You can earmark proceeds from your estate to help your child purchase a home or another type of investment of your choosing. You may even further protect this disbursement by having the trust pay the bank directly.

Helping you promote financial independence

Through your estate plan, you may be able to help teach your child how to manage money without lecturing, even if he or she does not have a triggering event such as those mentioned above. You can create an allowance within the trust that doles out a monthly or annual amount. To simplify matters, this may be possible via a trust-based credit card with a limit that the trust pays off each month. You may also be able to tie distributions to future earnings.

Give yourself peace of mind about the future

Allow yourself to think outside the box with your estate planning, and let an experienced estate planning attorney help you draft a trust that best serves your needs.

By creating a trust that manages your estate and the financial resources you've put in place for your children, much of the worry about their financial security can be eliminated. If they aren't savvy financial planners, the trust can help pick up the slack.

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