Leaving Money to a Family Member Who Is Bad With Money

Not everyone has the necessary financial skills to manage large amounts of money. Your wealth represents a lifetime of hard work and smart investment choices, and you may be concerned about leaving it to a family member who is bad with money. What if your loved one wastes your life savings on poor financial choices? How can you prevent this from happening while still providing your relative with a financial safety net? This may be something worth discussing with an experienced estate planning lawyer in Boca Raton.

The Power of Spendthrift Provisions

A spendthrift provision is an obvious choice when planning for a relative with poor financial skills. This is a type of clause that you can add to your trust. With this clause, your beneficiary will not receive their entire inheritance at once. Instead, they will receive periodic distributions of assets over time. This prevents the beneficiary from wasting the assets on things like addictions, gambling, or poor investment choices.

A spendthrift trust gives you many options. Your beneficiary may only have the ability to access their inheritance to pay for certain things, like college education or childcare. A spendthrift trust can also delay the distribution of assets until the beneficiary has reached a certain age.

What About Discretionary Trusts?

Discretionary trusts offer similar benefits with a number of distinctions. While spendthrift trusts distribute assets at regular intervals, a discretionary trust is more flexible. The trustee has the discretion to distribute these assets whenever they feel it is appropriate, based on the instructions left behind by the grantor (you). Discretionary trusts could offer more asset protection from creditors and other threats.

Conditional Gifts and Bequests

Those who wish to avoid trusts also have options when writing their Wills. A conditional bequest in a Will only provides your beneficiary with their inheritance after certain conditions are met. These conditions may vary. If you are concerned about your beneficiary’s substance abuse problem, your conditional bequest might require them to complete rehab before they receive their assets.

If you are more concerned about your beneficiary becoming overly reliant on their inheritance, you might create a condition that forces them to acquire a college degree before receiving their assets. This can help ensure self-sufficiency. Another obvious choice is to create a conditional bequest that only distributes assets after your beneficiary reaches a certain age. You can also offer conditional gifts while you are still alive.

Can a Boca Raton Estate Planning Lawyer Help Me?

A Boca Raton estate planning lawyer may be able to help if you need to provide for a family member who is bad with money. Whether your loved one struggles with a substance abuse problem, a gambling addiction, or any other financial issue, effective estate planning strategies can protect them from their own poor choices. Explore these strategies today by contacting 411 Probate.

Source: 

leg.state.fl.us/Statutes/index.cfm?App_mode=Display_Statute&Search_String=&URL=0700-0799/0736/Sections/0736.0502.html