Estate Planning: Leaving Assets to a ‘Troubled’ Heir
Unfortunately, no family is perfect, and there is often a “black sheep” of the heirs that is known to not make the wisest and healthiest of choices in life. This does not mean that you love or care for your troubled child any less than your other children or heirs. It does translate into you needing to provide for them in your estate plan differently after you have passed on.
Instead of inter vivos gifts or an inheritance written out in a will, a trust with certain conditions or stipulation may be ideal for this heir to entice them to make better decisions. The trustee can be an independent third party, even from a company that specializes in it, which will control the funds to make sure the heir is following the guidelines. The prerequisites to attaining the funds could include certain situations where the money will be disbursed, certain conditions that cannot occur to receive funds, or the trustee could be given full discretion to make the decisions of when.
The types of conditions or incentives that can be used with a trust include:
- Drug or alcohol testing before funds are released
- Payments directly to landlords, colleges, etc., rather than payment to the heir
- Disbursement of a specified lump sum if the heir graduates from university or keeps the same job for a certain time period
- Payment only to a drug or alcohol rehab center if the child is in an active period of addiction
- Disbursement of a lump sum if the child remains drug free
- Payments that match the child’s earned income
See Estate Planning: Leaving Assets to a ‘Troubled’ Heir, TrustBuilders.com, November 14, 2016.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.