Leaving money to a beneficiary in a trust is much different than leaving it to them directly. If you give someone $20,000 in your will, they may just get a check from the estate executor. But if you put the $20,000 in a trust, that fund holds the assets on behalf of the beneficiary. They do not own the money directly.
But if they can only access the money through the trust, who decides when they can make withdrawals? The beneficiary typically isn’t in charge of this process, so who makes the decisions about how money can be spent or when they can access it?
Leaving instructions
It depends on the trust, but it is fully possible for you to make these decisions. All you have to do is leave instructions for the trustee. They are legally obligated to follow those instructions.
For instance, maybe you want the money from the trust to go toward the beneficiary’s college education. The trustee can make withdrawals to make tuition payments or purchase books and other supplies, but the money has to be used as you instructed.
A discretionary trust
Another option is just to give the trustee discretion to make these decisions themselves. You may want to do this if you are concerned that a young beneficiary may waste their inheritance, for instance. You don’t have a specific goal in mind for the money, but you want to appoint an older and more mature trustee to make these important decisions for them.
These are just two things to think about when setting up a trust. Be sure you know exactly what legal steps you’ll need to take.