Are you comfortable with how your 20 year-old child might spend an inheritance if you and your spouse unexpectedly passed away?
According to an article by David Dobbs in the October 2011 issue of National Geographic (“Beautiful Brains”), the human brain is in the process of development from age 12 to 25. Because of the ongoing developmental process, your 20-something child is likely to take more risks in attempting to fulfill their need for excitement than your more conservative 30-something child.
Ensuring that your inheritance will be managed for the maximum benefit of the child is critical not only during the age where their brain is still developing but at any age, to protect them from the adverse impact of life events such as divorce or problems with creditors.
Setting up a trust allows your child’s needs to be met. It also protects your child’s inheritance. You determine at what age the money will be released to the child’s full control. Alternatively, you could choose to maintain the money in trust for the child’s benefit for their entire lifetime. If set up properly, this option provides the maximum protection in the event of a divorce or creditor problems.
It’s worth considering the value of a trust to ensure the availability of your child’s inheritance beyond his or her 18th birthday.
