How much control is "too much"?

Many of our clients come to us because they have children or other potential heirs they don't feel comfortable leaving a large, lump-sum distribution to. We completely understand. Especially when heirs may be dealing with creditor's liens, serious debts, drug and/or alcohol issues, or just aren’t very good with money, it is important to make sure they receive the benefits you are envisioning while also being sure we protect the legacy you are leaving.

However, sometimes when clients come in to do their planning, the plans they have in mind can be a little too constricting for heirs, especially as they get older. While more specific plans do offer some protections, trusts become irrevocable after our clients' deaths, which means that if their heirs’ circumstances change in the future, they are still stuck with the plan that might have been developed decades ago. While we do encourage clients to plan, we also like to ask them how much planning might be too much.

Of course, one way we try to deal with planning for the future is to index specific numbers, such as monthly payments, for inflation in our documents. However, if your twenty year old son who has spending issues grows up to be in his mid-thirties with good saving habits, he may still be locked in to another thirty years of payments you set up. Meanwhile, the money may be invested by a family member or professional trustee who has the money invested in a very conservative, lower risk account that isn't getting anywhere near the returns your son might have gotten on his own.

To deal with some of these situations, we often advise first deciding if the distributions really need to be over such a long time period. Even if you think they do, we often suggest giving someone, such as a trusted family member or friend, the ability to make some modifications to how long the distributions are made over if circumstances change in the future. This person, often called a “trust protector” in our documents, doesn’t have to be the one handling the day-to-day administration of the trust. Instead, their job is to keep an eye on the circumstances and to change how the inheritance is structured if needed. This could mean making the plan less restrictive if the heir becomes more responsible, or even making the plan more restrictive if something unfortunate happens to the heir later in life.

Our biggest goal is just to make sure your wishes are carried out to the best of our ability, while also making sure the plan works for everyone as life goes on. If you or someone you know are interested in creating a plan or maybe making your own plan more flexible, give us a call and lets set a time to go over the details and see how we can best help you.

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