According to research on generational wealth and asset management, one of the most significant risks to financial security for future heirs is a lack of preparation and communication about their assets. Heirs should be prepared for their financial futures, whether it’s thousands of dollars or millions. Unfortunately, these conversations rarely happen due to fears and the uncomfortable feelings associated with discussing money matters. It’s important to prepare your heirs for gaining access to a trust fund, which means conquering many of the common fears facing families as they begin the trust funding process.
Common Fears Families Face When Leaving an Inheritance
Many worries come with divvying assets and properties to heirs, but a trust attorney can help you work through these common issues and establish an estate plan that meets all of your financial goals and plans. We’ve compiled a list of the most common fears families face during the trust funding process and how to overcome them.
- Fear that Money Will Make Your Heirs Entitled: When leaving money for your future heirs, you hope to provide stability and the opportunity to fund their endeavors without worry. For every heir that uses their trust fund to pay for college or a business plan, there are heirs whose inheritance has robbed them of any will or desire to work hard or make a plan for the future. You can alleviate this fear and concern by adding stipulations to your estate plan that requires certain benchmarks to be attained before paying funds from the trust. There could also be provisions that pay towards educational expenses and business endeavors. Estate plans can include restrictions that prohibit frivolous spending. When creating your trust, you can add in as many asset protections as necessary and ensure the trustee you appoint understands your wishes and concerns and executes your wishes accordingly.
- Fear Your Heir Will be a Spendthrift: After you’ve worked hard and saved money over your life, you want to know that it’s going to be used thoughtfully and with purpose. Sadly, money management skills and frugality may not be traits that all of your heirs have inherited. Many families worry heirs will squander their inheritance on useless items or create unsafe circumstances by flaunting their wealth through extravagance. It can be tempting for your heirs to squander their trust funds on the trappings of success and wealth in attempts to showcase them to the digital world. Much like in the previous example, you can outline how money from the trust will be used for your heirs. If you don’t want the money to be a slush fund for excess, you can stipulate that any money from the trust be used for educational expenses or a home purchase, for example. Your trustee can also help ensure any objectives you stipulate are met.
- Fear Your Heir Will be Used for Money: It’s hard to know who you can trust when you have money, so it’s easy to understand why you’d have this fear. If you are funding a trust that will leave your heirs with a sizable fortune, it’s understandable you’d be worried about the undue influence of those who would seek to use your heir to gain access to their wealth. A trust attorney can include restrictions that help protect your heirs from creditors and predators.
- Fear Your Trust Will Create Familial Jealousy: When it’s time to share your assets with your family, it can be tempting just to split everything into equal shares. However, that’s not always what’s best for everyone in your life. If you have a business or property you’d hope to pass on, it can make it difficult for everyone to feel they’ve been treated fairly. There is a big difference between passing on a fair share of the assets and equally distributing your estate to your heirs. You don’t want to create animosity amongst your family members. Many professionals advise giving heirs within the same generation a share equal to their other family members to avoid this jealousy. However, your choice must be made with careful consideration and thought about each of your family member’s current lifestyle and need. You may feel that fairness and equality aren’t as important as your wish to give each heir their best start in life.
- Fear of Mistakes or that Decisions are Final: Once you’ve funded your trust accounts and created an estate plan, it’s common to worry you’ve made a mistake or want to change details. You may speak to a family member and decide changes are necessary. Depending on the type of trust you fund, you should be able to make changes as needed to adapt to your plans for your heirs. A revocable living trust can be changed as long as you are alive and within sound mind and body. An irrevocable trust is stricter, so your selections should be certain before entering into one of these plans.
- Fear of the Money Conversation: Talking about money has always been uncomfortable – regardless of how much or little you have. It’s important to have a conversation with your heirs about your financial wishes for them and their futures. It can be uncomfortable, and if you need to make changes, work with your trust attorney to ensure you have the type of plan that allows for changes. Your financial situation can change over time, and if that happens, you may need to revisit these topics with your heirs to ensure everyone understands what’s in the estate plan and how it will be executed.
Legacy Law Center Can Help You Overcome Your Fears
You can start creating your estate plan for your future heirs with one of our estate planning and trust attorneys. We can help you create and prepare all of the necessary documents to reach your financial goals for your estate and your family. The Leesburg trust attorneys at Legacy Law Center can develop an estate plan that clearly defines your wishes for your heirs. Call us today at (571) 200-5559 to schedule a consultation.