There are many ways to use trusts to pass an inheritance on to the next generation. One of the benefits of putting money into a trust is that instructions can then be left for a trustee, allowing the grantor to influence when and how that inheritance is distributed.
One tactic is to delay the inheritance and create a distribution schedule tied to the beneficiary’s age. This is sometimes done when the beneficiary is relatively young. A 19-year-old college student can technically inherit property, for example, but the grantor may want to delay when they receive a significant amount of money.
Picking multiple ages
Technically, a person could simply pick one age; for instance, they could state that the beneficiary gets access to the trust at 25. But they can also create a schedule and choose multiple ages for distributions.
For example, the grantor may determine that the young person should immediately receive the first 10% of the inheritance, as long as they are a legal adult. They may then receive another 40% when they turn 25. But they would not receive the final 50% until they turn 30.
If the grantor passes away while the beneficiary is still 19 years old, the inheritance could effectively be distributed over more than a decade.
Setting up a trust
This is simply one example of how a trust can be used. Grantors can also create trusts with a specific focus, such as paying college tuition costs, or they may use a special needs trust to help protect a beneficiary’s access to government benefits.
To learn more about your legal options while creating an estate plan, it can be helpful to work with an experienced attorney.