When many people write a will, they are essentially giving their inheritance to the selected beneficiaries right away. There can be a delay as the estate goes through probate. Documents have to be verified, assets need to be inventoried, creditors need to be paid, and then the estate executor can pass the assets on. But as soon as these steps have been taken, the transfer happens.
Some people are concerned about this when making their estate plan. A grandparent may want to include their grandchildren in the plan, for instance, but those grandchildren may be minors or young adults, such as college students. The grandparents are not sure they should receive such a large inheritance at a young age.
Using a trust to delay distributions
One tactic to spread out the distributions is to instead put the inheritance into a trust. The young beneficiary can still be named in the trust, and a trustee will be assigned to manage distributing the assets to them when appropriate.
But the trust could then give specific instructions to hold back all or a portion of the inheritance. People sometimes pick specific ages. A grandparent may stipulate that the beneficiary can receive 25% of the trust at age 21, the next 25% at age 25 and the final 50% when they turn 30 years old, for instance.
This is just one example, but trusts give you a lot of control over how assets are distributed, and you can set up rules and regulations that work for your family. Be sure to carefully consider how you may want to incorporate trusts into your estate plan when drafting the documentation.
