Sometimes you have to make tough decisions in life. You have to face up to situations that are unpleasant to think about but nevertheless warrant your attention. The drafting of a will represents one such situation and is something that many people put off for as long as they can because they don't want to deal with the emotions. Furthermore, they realise that certain questions may arise regarding their beneficiaries. If you are worried how others will handle any assets that you bequeath to them, what should you do?
When Challenges Arise
It is often difficult to split up an estate and allocate the relevant amounts to different beneficiaries. When somebody is in this situation, they often worry whether they are being fair and equitable or looking out for their successors and friends properly. They may also be worried about the financial acuity of certain beneficiaries, for a couple of reasons.
Dealing with Children's Maturity
For example, does your child have the financial capacity to properly manage the significant inheritance you are set to leave? Much will depend on how old they are now and what you portray into the future.
Most children mature and start to look at their financial obligations a lot more sensibly as they exit their teens and enter into their 20s. How do you make sure that they don't squander your inheritance in the meantime?
One way to do this is to go ahead and make the child the trustee of the inheritance trust, but add specific safeguards for peace of mind. You could alternatively go all the way and ensure that the fund is managed only by an independent and trusted representative, such as an accountant or a family friend.
A Better Option
If you don't want to go quite as far as that, add some limitations to restrict how the funds can be accessed, even though the child is the main trustee. A requirement could be written in that says that any attempt to dispense with the trust or end it earlier than a given date has to be verified by an independent trustee. This could be an accountant, for example. It could be stipulated that the child needs to obtain financial advice from this independent trustee before they are allowed to withdraw any significant amount of capital. Finally, a separate constraint could be added that dissolves these limitations by a certain date or when the individual gets to a specified age.
If you want assistance in writing up your will with this type of situation in mind, ask your wills and estate lawyer to come up with the right documents and wording for your situation. They'll be able to ensure you go through the correct stages of estate planning.