Many North Carolina residents may want to avoid the estate planning mistake of bequeathing their assets directly to their children. Adult children who lack financial maturity could end up squandering direct inheritances.
Parents who want their assets to last for generations should consider having that wealth professionally managed. Even if their adult children are aware of their financial ineptness and seek the counsel of a financial advisor, they might choose a poor money manager.
Parents should take the time to consider whether each of their children has the ability to manage the assets that they will receive. Once an honest assessment is made, parents can decide if establishing a trust would be wiser than distributing the assets outright.
One of the benefits of using a trust is that provisions can be created to dictate when distributions will be made. Parents can opt to distribute only a percentage of the value of the trust or just investment income each year. They can also give a trustee the authority to decide how the trust assets should be distributed. This individual could use the best interests and needs of the beneficiaries as guides.
Trusts can also be set up so that distributions can be stopped and then resumed. For example, a trustee could stop issuing distributions if a beneficiary has gambling or drug problems. The distributions would be resumed when it is in the best interests of the beneficiary again.
An attorney who practices estate planning law may advise a client about the different types of trusts and which one may be most appropriate for their goals. Legal counsel could help draft trust provisions that will handle assets according to the client’s preferences.