If you have worked hard and invested wisely over the years you have likely done so with the hope that you would be able to pass down a decent inheritance to your loved ones when you die. What happens though if your loved ones blow the inheritance you leave them? Experts tell us that it is a real possibility – more so now than in generations past. In order to prevent that from happening you need to accept the possibility that it could and then plan accordingly.
The amount of money that is expected to change hands through inheritance over the next couple of decades is staggering. Experts tell us that the “Great Wealth Transfer” will likely result in trillions of dollars flowing from one generation to the next within the next few decades. The will be reaching their life expectancy within the next few decades. Unfortunately, the fragile baby boomers will be passing down that wealth to a generation that is focused more on immediate gratification. The results may be tragic.
One recent survey found that one-third of people who received an inheritance had a negative savings balance within just two years of receiving the inheritance. The reasons for this are varied and complex; however, one common thread experts found was that beneficiaries tend to view and inheritance as “fun money” that can be spent on “extras” instead of viewing the gift as a way to save for retirement or even to pass on down to future generations.
What can you do to prevent your hard earned assets from being squandered away? A carefully thought out estate plan is the key. Your estate plan can accomplish far more than just decide when beneficiaries will receive assets. For example, one way to ensure that assets you leave behind are not wasted is to create a trust agreement and transfer your assets into the trust. You can then use the trust terms to dictate how the assets may be used and under what circumstances the assets may be released. You might, for instance, stagger a beneficiaries inheritance, only dolling out smaller amounts while the beneficiary is a your adult and then allow the remaining lump sum to be released when the beneficiary is older and better able to handle a large sum of money or assets. You can even decide how the assets can be used by including trust terms that require a Trustee to approve requests for a disbursements if you allow for more discretion on the part of the Trustee.
However you decide to protect your assets from spendthrift beneficiaries, it all starts with your estate plan. If you have additional questions or concerns about estate planning contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia, by calling 800-295-1917 to schedule your appointment.