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Heir tight: The dos and don’ts of creating rock-solid trusts



Good article via Jennifer Woods at

Imagine working for decades so that one day you could pass your assets on to your children or grandchildren.

Wouldn’t you like to know that when the day comes, they won’t lose it all on bad investments or to a gold-digging spouse—or simply because they have no idea how to properly manage large sums of money?

Whether you’re bestowing assets during your lifetime or leaving them as an inheritance, creating trusts with well-thought-out terms can ensure your money lands in the right hands and isn’t squandered.




“When you write a will and leave money outright to your heirs … once it’s inherited, there are no controls on how that money is being handled, and you don’t know what will happen,” said certified financial planner Ian Weinberg, CEO of Family Wealth and Pension Management.

“Using trusts helps protect your heirs against future catastrophes—[such as] bankruptcies, money-hungry predators disguised as friends, family looking for loans or business bailouts and other financial challenges—and can also provide for certain special needs of your children or grandchildren,” he said.

Many trusts make multiple payouts over time, the hope being that spacing out distributions will prevent the beneficiary from blowing it all in one shot.

Read More Busting age-based investing myths

Russ Weiss, a certified financial planner with Marshall Financial Group, said that when it comes to setting the distribution terms with clients, “the conversations become tricky.”

In many cases, his clients use age-based payouts, in which a percentage of assets is distributed at various ages.

“The child doesn’t get it all at once,” he said. “If they are irresponsible with money, hopefully they can manage [with spread-out distributions].”

Distribution options


Payouts at 25, 30 and 35 years of age have historically been common, though experts warn that in this day and age, 25 is too young to properly manage large sums of money.

Weiss also has clients who schedule periodic payouts after the benefactor dies, so beneficiaries may get a distribution, for example, every five years following the death.

Who needs a trust?

  1. Trusts are not just for the ultrarich. If your heirs stand to inherit even a few hundred thousand dollars, a trust is worth considering.

  2. People with young children could benefit from a testamentary trust, established in a will and effective upon one’s death. It dictates how assets will be distributed at later dates. The drawbacks? These trusts go through probate, delaying disbursements, and the records are public.

  3. Revocable trusts, or living trusts, are often a better option. You allocate, access and manage assets, and amend terms while you’re alive. When you die, the trust can convert to an irrevocable trust with unchangeable terms. Other pluses: They’re easy to set up, are flexible and protect privacy.—J.W.

  4. For more info regarding the proper use of Trusts feel free to email me. Sincerely, Brian

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