It is important to have a will directing where your assets will go when you pass. For individuals whose beneficiaries may be minors, it is at least as important to name a person to care for them and act as guardian while the beneficiaries are underage. What happens when those beneficiaries are no longer minors?
I often tell clients that 25 is the new 18. Just because a person is 18 years old does not necessarily mean he is ready to be an adult. This is especially true if considering the circumstances under which an 18 year old would suddenly stand to inherit money from his parents. It is likely to involve the death of one or both parents. In addition to perhaps being too young or immature to properly manage his own finances, this person is often dealing with the grieving process.
It is advisable to set up a testamentary trust to ensure that funds inherited by a young person are properly invested and preserved until the beneficiary reaches an appropriate age. Such a trust may provide for the assets to be used for the health, education, maintenance, and support of the beneficiary while preventing the assets from being dwindled frivolously.
It is common to have such a trust terminate and payout the proceeds to the beneficiary upon reaching a certain age, typically when the beneficiary is at least old enough to have completed college. Depending upon the amount of money involved, it may be advisable to make the termination age older, or stagger the release of assets to provide the beneficiary a second or third chance to get it right if they manage to squander the first distribution.
Talk to an Experienced Pennsylvania Lawyer About Setting up a Trust
The facts and circumstances of each person’s situation will dictate how a trust will be managed, so it is a good idea to discuss your wishes with an estate planning attorney to best protect your children’s inheritance. Feel free to contact our office at 215-822-7575 to schedule an appointment with any of our estate planning attorneys: Jay C. Glickman, Lewis Goodman, or John H. Filice.