A trust can be a useful tool if you want to leave money to someone, but you don’t want to do it all right away. Many times, this comes back to a perception of maturity. For example, you may choose to leave $600,000 to an heir, but your heir is currently just 15 years old, and you don’t think he or she can handle that type of money.
By putting the money in a trust, you can set up specific age limits. This could be as simple as saying that the person can have the money in full when he or she turns 18. Many people put the limits a bit higher then that, even skipping over the common benchmark of 21 and saying that the money can pay out at 25, 30 or 35.
Part of the idea here could be that people sometimes may feel the person will use the money more responsibly at those ages. While you may fear that a 21-year-old college student would waste the $600,000, for instance, you may think that a 30-year-old will be more likely to use it to buy a home.
Some people even split the payouts up into thirds, trying to prevent all of the money from being spent at once. For instance, you could let $200,000 be distributed at age 21, let another $200,000 go at age 25, and then let the final $200,000 go at age 30.
There are many ways that trusts make distributing assets easier after you pass away, rather than just splitting up a lump sum on the spot. Make sure you know about all of your different options in Arizona and how they can help.
Source: UWYO.edu, “What Everyone Should Know About Trusts,” Randall W. McKee, RFC, accessed Aug. 08, 2016