Why Staggering an Inheritance Is Often Better than Gifting a Lump Sum

Handing a young adult a large sum of money seems counter-intuitive right? Despite this, people do it all the time through their estate plans. Without thinking about the consequences they devise an estate plan that hands a 19 or 20 year old a small fortune should they happen to die when a child is old enough to inherit directly, yet not old enough to be responsible with the inheritance. This is why staggering an inheritance is often better than gifting a lump sum of money. Staggering the inheritance you leave behind protects the assets you worked so hard to accumulate and protects your beneficiary from making costly mistakes with his/her financial future.

Leaving a lump sum of money and/or valuable assets to a beneficiary who is still relatively young is almost always asking for trouble. Regardless of how mature and intelligent your 20-something child/grandchild may be, putting a large sum of money in his/her hands all at once is a recipe for disaster. Financial wisdom is something that is almost always gained with age and experience. The best way to gain that experience is to dole out small amounts to your beneficiary over a number of years so that he/she can learn how to handle the funds. By staggering your inheritance in this manner you ensure that a spendthrift beneficiary does not blow the entire inheritance in a short period of time. You also avoid the possibility that creditors of the beneficiary will get their hands on the assets if the beneficiary is already in financial trouble at the time of your death.

There are several ways you can stagger the inheritance you leave behind. Talking with your estate planning attorney is the best way to decide what method will work in your situation and with your beneficiaries. The inheritance can be held in trust with monthly or yearly payments made to a beneficiary or you may decide to distribute a small lump sum when you die with larger lump sums distributed when the beneficiary reaches certain ages, such as 25, 30, and 40. The beauty of setting up a trust agreement is that you have the flexibility to stagger the payments in any way that you wish. What works for one beneficiary may not work for another. With a trust agreement you can tailor the disbursements to fit the needs and abilities of the beneficiaries.

If you have additional questions or concerns about incapacity planning or estate planning in general, contact the experienced New York estate planning attorneys at The Law Offices of Saul Kobrick, P.C. by calling 800-295-1917 to schedule your appointment.

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Saul Kobrick

Saul Kobrick is an attorney licensed to practice law in the State of New York and the Founding Partner of The Law Offices of Kobrick & Moccia. Mr. Kobrick is licensed to practice law in all courts of New York State, as well as in the Federal District Courts for the Southern and Eastern Districts of New York. He is a member of the New York State, and Nassau County Bar Associations as well as a member of the American Academy Estate Planning Attorneys. Mr. Kobrick is also a member of the National Academy of Elder Law Attorneys.

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