Estate planners often find that adding a spendthrift trust can better suit the needs of an heir than a standard trust. These kinds of trusts add an effective barrier between the principal of the trust and your heir.
Spendthrift trusts are especially useful when an heir struggles with drug or alcohol abuse, is married to a controlling spouse or lacks money management skills. Because the principal remains inaccessible to heirs or others, trust grantors may consider the problem solved.
But one important consideration remains.
Be mindful when choosing the trustee over the funds
Estate planners may reason that it is best to choose a close family member as trustee over the funds of another relative. But this is often a misguided choice that foments more harm than goodwill.
Choosing one family member to oversee another’s finances creates an inherent imbalance in the relationship. Even when all appears to be well, these arrangements can reinforce lifelong stereotypes of the “responsible” sibling or parent having to manage their “irresponsible” relative’s financial dealings.
What may be a better option
By skipping over family members when appointing a trustee for a loved one’s funds, you spare the feelings of all and don’t appear to make sweeping judgments or rely on old stereotypes. Appointing an unrelated and unaffiliated third party as trustee can preserve familial relationships that could otherwise be strained by the situation.
By retaining a professional estate planner, you can learn which options work better for you as you plan how to distribute your estate once you have passed away.
