As many in New Jersey consider how to pass on their wealth to loved ones, the issue of responsibility often arises. Parents and grandparents want to create an estate planning package that allows their heirs to access an inheritance, but also want to ensure that those funds are used in a responsible manner. This can pose a challenge, one that is best met by the careful creation of one or more trusts.
Trusts are among the most flexible estate planning tools available. Individuals can structure a trust to guide how and when their chosen heirs can receive funds. The scope of stipulations that can be made is virtually endless, and each family can create a trust that meets their own unique needs.
For example, if parents or grandparents want to ensure that the assets passed down are only used to fund higher education for their beneficiaries, those wishes can be solidified within the trust. Similar restrictions can be made for entrepreneurial ventures, religious missions, travel, charitable efforts and so on. In creating this type of trust, the designated trustee is given the authority to make decisions concerning distributions, so the stipulations must be comprehensively outlined in writing in order to ensure that one’s intentions are carried out.
Creating this type of trust can be viewed as overly restrictive by those who stand to inherit. Therefore, it is important for New Jersey families to make their estate planning intentions known well in advance. By sitting down with children and grandchildren and explaining the reasoning behind a restrictive trust, those who will be named as beneficiaries can gain a fuller understanding of why these assets are being made available and how the grantors intend for the money to be used.
Source: The New York Times, “Focusing on the Human Element of Estate Planning“, Paul Sullivan, Nov. 7, 2014