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Here are 3 ways to leave behind an inheritance for your beneficiary

If you’re putting together an estate plan and have a large amount of money to leave to a beneficiary as an inheritance, one thing you may be interested in is a trust. With a trust, you can leave assets to your beneficiary and protect those assets against creditors following your death.

There are multiple ways to leave behind an inheritance, so here is more information about the different methods and why a trust fund is a good idea.

  1. Leaving behind assets in a lump sum

One way that many people leave behind inheritances is by having the balance of the estate distributed to the beneficiary or beneficiaries. There are drawbacks to this, since no trust is involved. The major drawback is that the assets may be at risk if debts are owed. Other drawbacks include not having control over how your beneficiary spends the assets and the risk of them losing their inheritance in divorce or due to their own mismanagement of the funds.

  1. Leaving behind assets in a trust

Another method for leaving behind your assets to a beneficiary is to use a discretionary trust. In this form, the trustee of the account has control of the assets and can determine how they should be distributed. You can assign the beneficiary as the trustee at a specific age, if you’d like, or you can have someone else maintain control.

  1. Leaving behind assets in a trust fund

A final option is to leave behind assets in a trust fund. Trust funds can pay out in a lump sum or over time, based on your specific requests. For example, you may ask the fund to pay out 20% of the inheritance at 18, another 20% at 25, and the remainder at 40. You could have it pay out 50% when they get married or 50% upon the completion of graduate school. It’s up to you.

These are three ways people leave behind assets. You may want to talk to your attorney about trust funds, discretionary trusts and other options for protecting your assets and leaving behind a fair inheritance for your beneficiary.