One of the benefits of a trust is that there are different types of trusts you can create. If you do not feel comfortable giving your children a lump sum inheritance through a traditional trust, a spendthrift trust could be the solution.
Smart Asset explains that a trustee overseeing a spendthrift trust will provide payments based upon specific requirements established by the trust creator. You can have your trustee release payments for education, food and housing costs for your children. Here is a look at people who could benefit the most from a spendthrift trust.
People at risk of lawsuits
Some people work in professions that are more likely to attract litigants than other fields. If you suspect your children could lose a lot of money to a court judgment because of their work, you can place money in a spendthrift trust to keep it safe from creditors.
People who poorly manage money
Not everyone can handle coming into a large inheritance. Some people are prone to making extravagant purchases due to bad spending habits. Youth can also be a factor since many young adults lack experience managing money. Using a spendthrift trust could help ensure that your children do not squander an inheritance.
Descendants past children
You may know the spending habits of your adult children very well, but you might not have an idea of how your grandchildren will handle money if they are too young or you have no grandchildren yet. Some grandparents create a spendthrift trust for grandchildren just to stay safe.
The flexible nature of a spendthrift trust can handle a variety of family situations. Carefully consider whether this kind of trust could benefit your loved ones.