As you start creating your estate plan, you might find yourself worried about how long your assets will last in the hands of your beneficiaries. It’s a legitimate concern given that some people are just bad with money. But you don’t have to disinherit a loved one just because they have financial management issues. Instead, you can utilize effective estate planning techniques that seek to enhance the longevity of your estate’s assets.
Estate planning tools that can increase the length that your assets will last
If you’re looking to enhance the longevity of your estate, then you need to know which estate planning tools will be most beneficial in that regard. Here are some that you should consider as you develop your estate plan:
- A spendthrift trust: This type of trust is best reserved for those who you fear will squander away their inheritance. Through a spendthrift trust, you restrict the amount and frequency with which trust assets are released, thereby preventing them from getting their hands on the bulk of the estate at one time. This type of trust also protects estate assets from the reach of your beneficiary’s creditors until the assets are actually released from the trust.
- An incentive trust: With this type of trust, you set goals for your loved one to achieve, and only once those goals are attained will assets be released. So, if you’re worried about financial mismanagement, then you can require your loved one to complete a financial literacy course. But you have a lot of latitude as far as what you can require here, so get creative to ensure that you’re positioning your loved one to achieve the life goals you want for them.
- A discretionary trust: Like a spendthrift trust, a discretionary trust limits the release of trust assets so that they’re not quickly spent away. Here, though, the trustee makes the decision on when assets should be released and in what amount. So, if you’re going to go this route, you should ensure that you name someone you can count on to act as trustee.
- A generation-skipping trust: Here, you give assets directly to your grandchildren. While this type of trust can provide tax benefits, it can also ensure asset longevity since it’ll provide for your grandchildren and likely their children as well.
There might be other ways to ensure asset longevity, such as by carefully choosing your beneficiaries, modifying your estate plan as needed to address new assets and changes to family dynamics, and utilizing a dynasty trust. What’s important is that you carefully consider your options and what you want out of the future. That way you can make fully informed decisions that seek to protect your interests, as well as the longevity of your estate, while still providing for your loved ones.
Create the estate plan that works to achieve your goals
We all have goals when we set out to create an estate plan. There are multiple ways to go about creating your plan, but the process can be more nuanced than you think. That’s why it’s imperative that you educate yourself as to your options and the estate planning process as a whole. And if you need help understanding the best way to create your estate plan, then you should discuss the matter with your attorney.
But don’t wait too long to create the comprehensive estate plan that you need. If you do, then you could wind up in a situation where your estate plan is inadequate when the time comes for it to be utilized. So, take the time now to cross this off your to-do list and ensure that your vision of the future can be brought into reality.