How Do I Stop My Kids from Blowing Their Inheritance Early?

How to stop my kids from blowing their inheritance early.

We just sent off our kid to college. They’re doing great! Got all the ambition in the world. But if they received a large gift right now or an inheritance would that cut their drive a little bit and maybe hold them back? I’m attorney Michael Jenkins and I’ve helped hundreds of clients set up their estate plan addressing this point exactly. It’s one of the more common concerns that we have when we’re going through the process.

The best way in California to avoid this kind of scenario is by setting up a living trust to control how the inheritance goes. But let’s talk about why. In California, if you inherit something and you’re over the age of 18, generally you receive that outright with no strings attached and you can do whatever you want with that inheritance.

There’s no shortage of stories of somebody getting a bit of a windfall at 18 or 21, whatever the age may be, and for one reason or another, whether that’s poor life choices, bad investments, or otherwise, that money is gone. To protect against that, you can set up a living trust, revocable trust, a family trust we’re talking about the same thing. That trust will say who should inherit what. But it also gives direction and gives you a little bit of control over how that inheritance is to go.

You can say something as simple as my child won’t inherit until they’re 25, 30 years old or you can break it down a little bit. My child will inherit a third at 25, another third at 30, and another third at 35. Some people go further, and they hold everything in trust for their child for as long as the child is alive. You can also do things like incentives. You can say you only inherit after achieving a bachelor’s degree a master’s degree. Whatever you want to put in there, a living trust is the best mechanism to make sure that your kids don’t burn through inheritance but instead have things structured where the inheritance is set up to benefit them the most.

If you have any questions about living trusts, how to structure an inheritance or about estate planning in general, feel free to get in touch. I’m a trusted estate planning attorney in San Diego and I’m always happy to help.

Michael Jenkins

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