Bequests to Children
Some believe that when it came to leaving children money, you should leave them enough to do something, but not enough to do nothing. There are parents who worry that their children might not handle an inheritance well. Some decide to disinherit these children entirely as a result, however, there are other options. One way to avoid this is to place conditions on the inheritance so they can only access it if they have proven to be responsible enough to do so.
You can leave the money in a trust and appoint a trustee to decide how the money will be dispensed. Additionally, you can set an age at which the trust ends and the money that remains goes to the child outright. The trust mechanism can place someone who is objective and responsible in control of the inheritance distributions until a beneficiary has sufficient maturity to handle the funds responsibly themselves. One of the easiest ways to do this is to avoid leaving a lump sum. It can be divided and dispersed only at certain times.
Similarly to not leaving a lump sum, you could also set up a trust and direct that the money gets dispensed in installments. The trustee would distribute the money as you directed. An alternative to a setting up a trust is to buy an annuity. An annuity is a contract with an insurance company that obligates the company to make payments to a beneficiary. The annuity would result in a steady, defined flow of funds to the beneficiary. You could establish incentives in order to reward desirable behavior. You can, for example, arrange for payments that occur if a child attends college or holds down a job. Or, alternatively, you can make payments contingent on completing an alcohol rehabilitation program or substance abstinence.
If you would like assistance with estate planning and fashioning bequests, consult with an experienced estate planning attorney.