Why you might base trust distributions on age

On Behalf of | Nov 9, 2023 | Trusts

If you’re thinking of setting up a trust as part of your estate plan to leave an inheritance, there are many different ways to do it. For instance, you could choose a trustee who has full discretion to decide how the money can be used. This is known as a discretionary trust. You could base the trust around a certain goal, like providing financial support to a child or grandchild so that they can attend college.

But another option is simply to base the trust around age. Why would you do this, and what benefits does it provide?

Delaying the distributions

This is often done when someone wants to delay the age at which the beneficiary gets their inheritance. For instance, maybe you have a potential beneficiary who is still a teen. You want to make sure that they don’t just use their entire inheritance frivolously, spending everything in a few years.

To do this, you may stipulate that they only get 10% of the trust when they turn 18. The next 40% are held until they turn 25, and the remaining 50% is held in the trust until they are 40 years old. They eventually get the entire inheritance, but not as soon as you pass away and not all at once.

By doing this, you give them the money at different stages in their intellectual and mental development. Someone who is 40 years old is likely going to spend the money much differently than someone who is 18. If you believe that they will make better choices later in life, this type of trust can be very helpful.

Having experienced legal guidance as you develop your estate plan can help you make the best decisions for all of your loved ones.