Some estate holders in North Carolina may have concerns about leaving assets to their adult children. Individuals who lack financial maturity and are bequeathed assets outright may squander an inheritance. In such a situation, setting up a trust may be a wise move.
Parents should not use their children’s age as an indicator of financial sophistication. If the goal is to ensure that the family’s wealth will last for multiple generations, it may be prudent to have the wealth professionally managed. While adult children may see the wisdom of hiring a professional advisor to manage an inheritance, it is not guaranteed that the beneficiary will make the right choice regarding a financial advisor or money manager.
One of the features of a trust that may appeal to parents is that it allows for rules that specify how distributions are to be made. For example, distributions can be issued on an annual basis and consist of only a portion of the trust’s value. Parents may also opt to give the trustee the power to determine how and when the distribution should be handled.
Furthermore, trusts may be set up so that the distributions can be stopped. If a trustee determines that a beneficiary who is involved with gambling or illicit drugs would be best served by not having access to the funds, the distributions can be paused and then resumed when it is in the beneficiary’s best interests again.
Many issues regarding trusts and inheritances come up in high-asset divorces. An attorney may help a client ensure that the assets placed in a trust are not subject to property division during a divorce.