A trust can be an alternative to disinheritance

It is a big step to disinherit someone by taking them out of your estate plan. But you may feel that it’s necessary. Perhaps you are worried about their spending habits, for example. Maybe they frivolously waste the money they have, so you believe they will burn through their inheritance quickly.

The problem is that disinheriting them may feel disrespectful or insulting. Additionally, this is still someone you care about, such as a child or a grandchild. You want to leave them an inheritance, but how can you do it?

Setting up a trust

The solution may be creating a trust and then putting the funds for that individual into the trust. You don’t give them anything directly in your estate plan, so they can’t just waste the money.

Instead, the trust can be set up for a specific purpose. Maybe you want them to get a college education, but you are worried that they’ll just use the money for traveling or partying. Putting it into a trust that is earmarked for college tuition costs means that’s the only way they can use it.

Additionally, you could use a discretionary trust and simply choose a trustee who you believe will make wise decisions. That person is then in charge of when to distribute funds to the beneficiary and how the money can be used. Your beneficiary still gets their inheritance, but they’re not in charge of it, so they can’t waste it.

These are just a few things to consider while drafting your estate plan. Be sure you know exactly what legal steps to take.