Many Texas residents have accumulated wealth and assets that they plan to leave to their children or other beneficiaries when they pass away. When it comes to making sure that your beneficiaries receive their inheritances at the right time, you have a few options available to you. An estate planning attorney can help you make the decision that works best for you and your loved ones.
What are my options?
Once you have decided who your beneficiaries are, you will have to decide how you want to distribute your inheritance. Your options for adult beneficiaries include:
- Leaving a lump sum: The most straightforward option is to give your beneficiary their entire inheritance all at once. However, this option can be risky if the beneficiary is not responsible with money. Your assets will also not be protected and may be taken in a divorce or lawsuit.
- Schedule multiple payments: Another option is to hold the inheritance in a trust fund and schedule multiple distributions over time. You can set it up so that your beneficiary receives a portion of their inheritance when they hit a certain age or reach a certain milestone. While you can place certain restrictions on the money, not all restrictions will be legally valid, so speak to an attorney to ensure that your terms are enforceable. Also, keep in mind that maintaining a trust long-term can be costly due to service fees.
- Discretionary trust: A discretionary trust lasts for the lifetime of the beneficiary and gives them the power to decide how the funds or property will be distributed, with some restrictions. You can decide what happens to any money remaining in the trust when the beneficiary dies. While maintaining this trust can be costly, a discretionary trust can provide protection for your assets.
It can be difficult to decide which option is best for distributing your inheritance, particularly if you have multiple beneficiaries. An attorney can guide you throughout the estate planning process to help ensure that your beneficiaries receive what you intended for them after you are gone.