Planning a financial future for heirs
While parents in Colorado naturally want to make sure their children are taken care of, some may be concerned that merely providing financial support will not be sufficient to ensure stability. Drafting a will that distributes funds to heirs may not seem as appealing in these situations, if there are not any resources dedicated to providing for the wise use of the inheritance.
A well-planned trust fund can provide the structure that heirs need to prevent them from “blowing” a fortune. According to The Fiscal Times, a trust fund can be set up as a guide for a child’s future, with distributions being achieved through milestones such as the completion of a degree program, rather than granted outright. Alternately, the funds could be allotted in increments that would be enough to sustain a person until the next distribution as long as the money is used wisely.
A trust fund may be able to provide regular income rather than wealth, but the term “trust fund baby” has developed a distinctly negative connotation for many. Wellsfargomedia.com points out that children who have wealthy parents may not develop the same drive or motivation because they never developed a need to support themselves, and may therefore be tempted to spend large amounts on unwise purchases.
One key, according to experts, is for parents to first identify their own reasons for the financial achievements. By communicating the values that created the wealth, a person may be able to help a child to develop his or her own goals and plans to accomplish them. This can strengthen the family relationship while providing the financial education that is essential to managing an inheritance.