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Estate creators can control beneficiary rights with trusts

Pennsylvanians who want to create inheritances for their loved ones may be wary of giving beneficiaries full control over valuable properties. Whether these feelings are motivated by reasons of perceived irresponsibility or other factors, estate creators can employ trust structures to help manage inheritance assets based on predetermined plans.

According to some estate planners, many adult children are simply unprepared to manage their finances or suddenly handle receiving large sums of money. To help these beneficiaries avoid making mistakes that might compromise their inheritances, trust grantors can designate parties known as trustees who will control the estate and its distribution. Trustees act according to explicit trust stipulations, such as limitations that only dole out a specific percentage of the assets on an annual basis. Other terms might grant the trustee more decision-making power, such as the ability to determine when and how payouts are made.

Experts also note that although trust creators can name anyone as a trustee, picking a trustee from among beneficiaries may be viewed as unfair or lead to bad blood between inheritors. Many grantors rely on family friends, professional financial advisors or impartial fiscal institutions that specifically offer trust management services.

Although trusts are common estate vehicles, they come in a wide range of types. They can also be created in unique ways, like through terms in wills or via charitable trust contributions. Because these structures have different tax and legal implications, it's important to select an option that works for the beneficiaries as well as the grantors. Those who plan their estates with lawyers might have an easier time creating trusts that actually serve their intended purposes.

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