How can I help prepare my children to receive a large inheritance?

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Planning for children to receive a large inheritance is a valid concern. It is generally not a good idea to give a large sum of money to a young beneficiary who lacks money management skills and good judgment.  Think of all the poor choices and divorces that occur before age thirty!

Your will or trust could simply say that any distribution for a beneficiary under age twenty-five (or a younger age you think is appropriate) would go to a custodian, named by the personal representative or trustee, of a Uniform Transfers to Minors Act (UTMA) account at a local bank.  The custodian has discretion to distribute funds to or for the benefit of the beneficiary until age twenty-five (the maximum age in Oregon).  Once the beneficiary reaches age twenty-five, the custodian distributes any remaining funds directly to the beneficiary.

If you want to retain control of the funds for a beneficiary older than twenty-five, or want to give an incentive to the beneficiary to pursue career training, you can establish a trust in your will (testamentary trust) or revocable living trust (subtrust).  This type of trust allows you to appoint a trustee to manage the trust assets for the benefit of the beneficiary until a predetermined age.  It can also give an incentive to the beneficiary to go to college or other career training program by making a partial distribution of trust principal upon successful completion of the college or training program.  While the beneficiary is enrolled in college or career training and making progress towards completion of the program, the trustee could make distributions for tuition, fees, room & board, books, and transportation.

An experienced estate planning attorney can help you explore options and identify potential problems when planning for younger beneficiaries. Contact the Estate Planning Attorneys with the Law Offices of Nay & Friedenberg in Portland, Oregon at (503) 245-0894 to set an appointment.

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