As a grandparent, you may feel strongly about leaving an inheritance to a grandchild or grandchildren. No matter what it may be, you realize that it will benefit them after you’re gone.
But before you can do this, there’s an important question to answer: What’s the best way to protect against a grandchild squandering their inheritance?
For example, you want them to use the money responsibly, such as to purchase a home or start a business, but you have concerns that they could do something else, such as buy “toys” or blow it partying.
If you have these concerns, there are several steps you can take to protect against this:
- Use a trust: With a trust, you can write in stipulations to help protect against this. For example, you could state that their inheritance is for a specific purchase. You could also state that they’re not able to access the money until they reach a certain age.
- Choose a trustee to administer the trust: Along with putting stipulations on your trust, you can choose a trustee who is responsible for administering it as outlined by the terms and conditions. This is often better than simply handing over the inheritance and hoping for the best. A trustee is staffed with the responsibility of maintaining control, as outlined by your wishes.
- Talk to them: While you’re still able to do so, talk to your grandchild about your estate plan and what you’re leaving to them. Yes, this can be a difficult conversation to have, as no one wants to think about your passing, but it’s one of the best ways to get on the same page. Have an honest conversation during which you share your wishes for how they’ll use their inheritance.
Just because you have concerns about a grandchild squandering their inheritance doesn’t mean you shouldn’t leave anything to them. Instead, learn how you can protect against this both now and in the future. Doing so will allow you to create an estate plan that gives you peace of mind, all while ensuring that your grandchild is responsible with their inheritance after you’re gone.