Instilling Your Values, Even After You’re Gone
Parenting is tough. We are faced with decisions that will affect our children from the moment they are born. We often second-guess ourselves, wondering if we should have done more… or sometimes less. We do the best we know how to do. We never give up – not when they turn eighteen or head off to college or buy their first home or have their first child. We adapt, but we continue to look out for them.
Have you thought about how you can continue to do this even after you’re gone? Through proper planning, you can continue to instill your values in your children, protect them financially and allow them the opportunity to develop a strong sense of self-worth, even when you are no longer physically here to do so. You can do this by leaving your assets to your children in a trust rather than through a will.
A Revocable Living Trust has three key players: the Settlor (the person creating the trust), the Trustee (the person managing the assets in the trust) and the Beneficiary (the person enjoying the assets in the trust). While you are living and healthy, you play all three roles. When you pass away, the person that you’ve named to take over as manager will step into the trustee role, and the person(s) you’ve selected to receive your assets will take over the beneficiary role.
The trustee follows the rules you have set for them in giving assets to the beneficiaries (often times your children). You will create a series of rules for discretionary distributions and typically also for mandatory distributions. Think of these like a shaker full of pepper. If the trust says that the trustee may give your children money for certain necessities, the trustee will sprinkle a bit of “pepper” (money) out for your children to use to meet their needs. This is a discretionary distribution. If the trust says that the trustee must give your children a certain percentage of the assets because they reached a designated age, the trustee must open the pepper shaker and pour out the right amount of pepper for the beneficiaries to do with as they please.
Three good things come from this kind of distribution structure. First, the beneficiary’s needs are protected. The trustee steps into the parent role and makes sure that the children (or other beneficiaries) get money for things like education, rent, health care, etc. Second, the assets are protected. Because the children are not getting their entire inheritance at age 21 (as they would under a will), they get several opportunities to receive money and learn how to manage it wisely. If they spend it irresponsibly the first time they get a distribution, they will likely learn and make better choices the next time. Third, the beneficiary’s self-worth is protected. That’s right, too much money at too young of an age can rob a person of the opportunity to work, fail, flounder, get back up and build the grit that leads to a strong sense of self-worth.
If you are interested in learning more about how a Revocable Living Trust may meet your parenting goals, please contact us for a free consultation. We would be glad to help.
