Trusts are often used in very complex situations with strict provisions. For instance, a special needs trust can hold money aside so that an heir has access to the money but still qualifies for government assistance. An incentive trust can stipulate that the heir only gets the money if they meet certain requirements and goals.
However, don’t assume that it always has to be this complex. Some trusts are fairly simple, and they have one main goal: delaying when the assets actually get transferred to your heirs.
For instance, perhaps you currently have an heir who is 15. They may be 18 by the time you pass away, but you still think that’s too young. You feel like they’re going to waste the money in ways that they’ll later regret when they grow up.
As such, the trust can hold that money back. Maybe you’ll give them 10% at age 18 so that they get something, but they can’t waste it all. At age 25, they get another 25%. The same thing happens at age 30. By age 40, you leave them the remaining 40%. Even if you pass away tomorrow, the trust still ensures that your wishes are followed. You can spread the inheritance out and only release it at ages when you think they’ll need it for more “valid” uses, like paying for school, starting a business or buying a family home. You may not dictate how they spend it, but you can protect it all the same.
Setting up a trust properly is important, so make sure you know your legal options.