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It’s hard to restrict spending, even with a trust

| Oct 5, 2019 | Trusts |

Say you have an heir who may spend your money on things that you do not support. Can you create a trust that restricts how they can use their inheritance?

Possibly. For instance, this happened with one woman who thought her son may give money to political causes that she did not support. She wanted to make sure her money — after it was no longer hers — did not go to these causes.

Technically, she could put a stipulation in a trust saying that the money can’t go to a political party or a similar cause, but the court may overturn that if the heir decided to challenge it. They may agree that he has freedom of expression that even his now-deceased parents cannot restrict.

To get around it, one option was for her to take a positive approach, saying what the money could go to. For instance, if her son was in college, an educational trust could pay for his tuition. This doesn’t prohibit donating, but instead, focuses on permitting educational uses. Other examples include paying a mortgage or putting grandchildren in school.

Even if she did that, though, money may still go to his causes. Say his mortgage would cost him $3,000 per month or $36,000 during the year. She could leave him $36,000 to apply to those mortgage payments. Hopefully, he had already budgeted to make those payments, though. Since he didn’t have to, he could simply pay the mortgage with her money and use his own $36,000, which he no longer needed, to give to political causes.

As you can see, using trusts gets very complicated. Make sure you know all the legal options you have.

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