We work hard all of our lives to create wealth and procure materialistic objects of either need or desire but when is it time to divest of our live's work and worldly possessions? What happens if something happens to you tomorrow? Is your Will up-to-date? What about your Powers of Attorney and Living Wills?
Ever consider a testamentary trust? A testamentary trust becomes a trust when you die (as opposed to an inervivos trust which is a trust while you are alive...not to be confused with a Living Will). If you have children, for example, you may not have the faith that they will spend your hard earned cash in a manner that is acceptable to you. Purchasing a Ferarri at the age of 19 may win your protegy some instant attraction from their peers but you refrained from purchasing one yourself in hopes of improving your child's standard of living and leaving a legacy. It was hoped to give them the additional boost to success and help them to strive to ensure your grandchildren have some additional benefits that you did not. (The world was built on the shoulder's of giants comes to mind).
You can write, in your Will, that you want your children to receive the funds in stages. Maybe something like 25% of the assets at the age of 25, another 25% at 30 and the remainder (50%) at age 35. In this way, if they misappropriate funds in their early years it is hoped that they have learnt a lesson and will continue to utilize the remaining 75% in a more responsible fashion. Trusts have some additional benefits in that they have their own marginal tax rates so if you have a child who is in the top marginal tax bracket the trust can provide some possible tax relief. Trusts are also considered not to be part of net family property so there may be some additional benefit in this regard. The downside is that once the trust is established it must file it's own tax return every year so that additional cost should be considered.
It may not be right or even relevent for some people but it is worth considering, if you have young children.
