[Please note that this is a frequent “reprint” article for our office. We intentionally re-release this important information at least once a year to our clients through the newsletter because the issue tends to come up. If you have any questions on this information about your own plan, then please schedule an appointment with the law office at 919-844-7993.]
Over the years, many of my clients have had differing views on just when their beneficiaries should be inheriting their whole share. Ages run the gamut from eighteen to sixty-five, or even never getting control of the whole thing. I once had a client who never wanted her son to inherit the entire estate but only have access to the income and the rest was in the discretion of the trustee. However, she couldn’t bring herself to say “never.” So instead we set the age of inheritance at 186. (Yes, that is one hundred and eighty-six years old). The point is our clients know their beneficiaries, at least for the most part and for the first “level.”
But what about those beneficiaries you may not fully know about? It’s extremely common for my clients to leave everything to their children, but if a child passes on then their share gets divided among their descendants. While my clients may know and trust the judgement of their children when it comes to handling a large inheritance, what about their grandchildren? In many cases, the grandchildren are simply too young to handle an inheritance now, and they are too young to judge when they would be mature enough in the future. It is for these situations that a general, “safe” age of inheritance is usually called for, and that age is usually 40.
Now many people look at the age of 40 as probably being too restrictive, and beneficiaries would probably be able to handle an inheritance much sooner. Possibly. But my clients are usually much more sure of the ability of their trustees to make wise decisions on behalf of these younger beneficiaries, and it is up to those trustees to use the money for the benefit of the beneficiaries. The trustee determines how money is spent on education and other necessities. The trustee decides whether or not to use the money for the beneficiary’s wedding or to buy them a car. And the trustee can decide to give them their entire inheritance early if they like what they see. But at the same time, if the trustee does not like the maturity and decision-making of the particular beneficiary, then they can withhold the inheritance as late as forty years old. Most of my clients agree that if a beneficiary hasn’t gotten their act together by the time they are forty, they probably aren’t going to so there is no sense in holding it back any longer.
In the end, my clients have to choose an age of inheritance they feel is appropriate, but that can often be balanced against relying on the judgment of the trustees they have chosen to give the inheritance early if it’s warranted.
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