Preventing A Lump Sum Inheritance

Preventing A Lump Sum Inheritance

You can simply have the money portioned out as your children grow older. While there will be some fees involved in setting up a trust and assigning a trustee to manage the money, you can rest assured that your money will not be distributed in a lump sum. You can dictate the terms in various ways. For example, you could release funds as the beneficiaries reach specific ages. Or you could have the money distributed after specific amounts of time pass.

Another option is to purchase an annuity with the funds from your estate. In this way, the principle funds belong to the bank and your beneficiaries will never get a lump sum. The bank will simply send them a monthly or yearly check for a specified dollar amount, for a specified amount of time. This option is especially useful if want to provide on-going support without the threat of the money being mismanaged.

Lastly, you can make the distribution of funds tied to certain incentives. This option, however, can cause high fees as the trustee of your estate will have to put in significant time to monitor the beneficiaries. For example, you could withhold funds if a beneficiary shows a positive test for drug use. You could also encourage hard work, by stipulating that the funds will be distributed upon completion of a college degree or specific number of years at work.

The first step is to talk with an estate attorney who will guide you toward the right decision. Estate lawyers create wills and trusts every day. They have options you never knew existed. While it may not be possible to take the money with you when you go, you can certainly make sure it stays in your family for longer than a weekend trip to Las Vegas.