When you are planning your estate it is important to consider not just what it is that you have to give, but who exactly it is that you are giving it to. All of your family members are unique individuals, and they invariably all have their own strengths and weaknesses. Some of your loved ones are probably well-established, having already demonstrated sound financial judgment as they have gone through life and managed their own affairs effectively. You may feel no trepidation about providing family members such as these with a direct inheritance that affords them total decision-making freedom.
On the other hand you may have some people on your inheritance list that have not shown a propensity toward effective money management. Since the passing on of your legacy will be the final opportunity that you have to provide for your loved ones, the sense of finality is a profound one. If you do have a spendthrift heir the inheritance that this individual receives may be very important to his or her ongoing financial stability. If it was to be used up quickly a very difficult situation could ensue.
The good news is that there are estate planning tools that are intended to provide a long-term source of financial support, and one of these is the spendthrift trust. With these vehicles the trustee administers distributions to the beneficiary in accordance with your wishes as stated in the trust agreement; the beneficiary does not have direct access to the the assets in the trust. Since the beneficiary is not the legal owner of these assets, creditors cannot target them so the assets are protected. If you appoint a professional entity like a bank or trust company to serve as trustee, you can rest assured that the principal will be invested wisely and that your beneficiary will enjoy a long-term financial underpinning once you have passed away.