Trusts give you the power to place conditions on inheritance. Do you want to provide for your family, but worry about the abilities of your children to manage a lump sum? Place it in a trust and relinquish control of a percentage of assets to the beneficiary at various intervals.
Ed Gjertsen, vice president of Mack Investment Securities, calls these controls imperative. "I don't know how many 18- or 21-year-olds save for college with some money in their pocket instead of going out and buying a car. That's where a trust has benefit over a will, because you can put advance directives in there. If something happens to me, my kids don't get money until certain thresholds: 21, 30, 35 or whenever you choose."
Retaining control becomes especially important when providing for minors or someone who is not in a safe situation or is otherwise not good with money. You can earmark money for a special use or condition, such as education.
"You can put in certain directives, so-called ruling from the grave," says Gjertsen. "You don't want to be too restrictive because a lot of those cases have been knocked down in court afterward. 'My son has to have a master's degree with a 4.0 grade point average in order to get any money.' That's not really going to happen. But it's good to have some general guidance."
Find out more about trusts for minors.
