According to Reuters, more and more parents are considering staggering their children's inheritances so that they individuals do not get a massive lump sum of money and spend it all at once. One mother says that she knew that her daughter would receive a massive inheritance at 18, and did not feel comfortable allowing the teenager to have that much money.
Instead, this mother decided to split the inheritance so that her daughter would get significant chunks of her inheritance money to cover life events. For example, the money would cover college education and the purchase of her first home. Other family members managed the money for this daughter in the time being, dealing out the funds as they became necessary. This way, the daughter would not have full access to the estate until she was well into her mid-40's and would be capable of spending the money wisely.
This is a new trend among parents: making their heirs wait until they are older before they can collect inheritances. The National Association of Estate Planners and Councils reports that the typical age for a child to receive their inheritance used to 18, 21, or 25. Now those ages have been going up, so that they are now approximately 30 or 35. Real estate attorneys say that there are several reasons why the age for inheritance has been going up. For one thing, kids are maturing later in life, and may be tempted to spend their money recklessly.
Another reason is because kids are starting to make all significant life events happen later on in their future. For example, children may leave the home later, marry later, and have kids much later than in past generations. Kids are also waiting to buy a home and settle down. Recent research shows that the average age for a first marriage has climbed to 27 for women and 29 for men. Also, 29% of all adults that are between the ages of 25 and 34 are now living with their parents, according to the Pew Research Center. This is up 11% from the amount of children that age living with their parents in the 1980's.
WealthCounsel reports that 35% of all people are now crafting their wills in order to avoid mismanagement by heirs. In order to do this, most parties are creating trusts and then designating third-party trustees to manage the bequests to the children. They are typically delaying the age when the children will receive the inheritance as well. Using this model, a child that may want to purchase a house can contact the third-party that is in charge of the trust and ask for the money.
Once they have the finances in hand, they can purchase their home without having to worry about the costs. The trust can also protect individuals from creditors in the event that he or she falls in debt. Sometimes these delayed trusts can cause complications. For example, if the beneficiary loses his or her job and wants more of the inheritance money before it is supposed to be granted it can result in severe complications.
If you are currently trying to organize a trust of this nature for your child, then you will want a probate professional or an estate planning lawyer on your side to help you with your case. With the right attorney there to help you you may be able to avoid any serious complications or difficulties. Also, an attorney can help you to draft up all necessary documents to establish your trust and take into account any taxes or costs that may be involved.