How does trust-based estate planning give you more control and flexibility? Here is a scenario to consider:

After working and saving for 30 years, you’ve accumulated over a million dollars in assets, to be divided equally among your three children. For now, let’s focus on your youngest, an impulsive 23-year old, Sam, who hasn’t learned how to handle money properly. What happens to Sam’s portion when you pass away?

Without a trust:

With a Will that transfers your assets directly to your children (or if you never prepared a Will), Sam could immediately use all of his inheritance however he wants. Instead of investing his inheritance, he spends it on a sports car he’s always wanted. At this point, his inheritance (a depreciating sports car) is vulnerable to many pitfalls, such as a forced sale to pay for debts, divorce settlements, or other situations.

Best case scenario: his wealth no longer grows, but instead shrinks. In seems that Sam certainly did not receive any long-term benefit from his inheritance.

With a trust:

There are types of trusts that can control how Sam receives his portion of the inheritance. Although Sam won’t have the benefit of instant gratification, his inheritance can be managed for his benefit until he reaches an age where he can responsibly manage it himself.

And if he needs the assets for a good reason (education or health care, for example), then the person managing the trust (the Trustee) can decide to use the trust assets for Sam’s benefit.

Additionally, this trust protects his inheritance against creditors, ex spouses, and others risks. This is just one brief example of how trust-based estate planning gives you greater flexibility and benefit to your family.