If you look up the term "spendthrift" in a dictionary, you'll find that it refers to someone who isn't good at saving their money or spending it wisely. These people are not "thrifty," but very much the opposite. If there's money in their pocket, they'll spend it without a care in the world.
As long as a so-called spendthrift can make it in the world without needing to take handouts from family and friends, they don't pose much of a problem. However, they could present you with a quandary if you want to leave them your life savings -- or a sizable chunk of wealth -- as an inheritance. Indeed, you'll probably be concerned that your spendthrift relative will blow all the money and assets received from your estate in one spot!
If you want to leave money to a relative or friend who isn't good at saving or investing, a spendthrift trust might be just the estate planning tool you need. Through the creation of a spendthrift trust, you can provide detailed instructions for how the money in the trust should be managed and cared for by the trustee you name to manage the trust. You can then provide instructions for how the assets will be distributed to the beneficiary. In the case of a spendthrift trust for someone who is irresponsible with money, cash disbursements can be made on a monthly basis until the individual reaches an appropriate age when you feel that he or she will be mature enough to safely manage the assets (if ever).
If you can see how a spendthrift trust will benefit your family, contact our law offices to learn more about this useful estate planning strategy.