You have considered disinheriting one of your adult children. You do not want to leave them out of the will, but you have seen firsthand that they have problematic spending habits. You do not want to leave them $200,000, for example, just to see them waste all of the money in the first 12 months.
If you simply give them money in your will, you cannot control how they use it. They can do anything they want, which is likely why you are concerned about their spending habits. But there are some options to consider, such as setting up a spendthrift trust, that may be able to help.
Delaying the distributions
You can set up a trust in a few different ways. One example is when it delays the distributions or spreads them out over time.
For instance, you may be worried about giving the person $200,000 as a lump sum. But you could put the money into a trust with instructions to give them $1,000 a month until the fund has been exhausted. You are still not controlling how they spend the $1,000, but you at least ensure they cannot waste the entire amount quickly.
Assigning a trustee
Another thing to consider is that you choose a trustee when you establish the trust, and it is that person who can actually access the funds. You can give them certain instructions, such as telling them different types of spending you would authorize, like educational bills or medical care. You can also just let them use their discretion. Either way, if you choose a trustee that you can count on to make wise decisions, you keep the beneficiary from wasting the money themselves.
Setting up a trust
This helps to show one of the reasons why trusts can be so helpful as part of your estate plan. Be sure you know what legal steps to take to set it up.