Providing for Beneficiaries without Giving Them a Blank Check

I recently met with an elderly woman in Scottsdale, Arizona, who wanted to know more about establishing a family trust. She is a widow with several grandchildren and great-grandchildren. I could tell by the sound of her voice and the twinkle in her eye how much she loves them and wants to help provide for them in the future. I’m sure there is not another grandparent out there who feels any differently!

She wanted to know why it is necessary to create a family trust. After all, she has taken the time to make her grandchildren and great-grandchildren the beneficiaries of most of her assets. She said that when she dies the funds will go to the children anyway, trust or not – so why pay for a trust? I then asked a few more questions about the grandchildren and it became readily apparent why it would be beneficial for her to create a trust.

She told me that while her grandchildren really do try hard to lead perfect lives, some of them are experiencing difficult times. A couple of them have either gone through or are currently going through a divorce. Some of them are trying to make it through college on tight budgets. Two of them have substance abuse problems and refuse to seek treatment. Most of them are minors and have never had to manage large sums of money before.

Once we started talking through these issues, the client began to see the benefits of establishing an MH estate plan to help provide for her beneficiaries despite the difficulties they might be experiencing. An MH trust would enable this grandmother to give specific gifts to each of her grandchildren in the form of a beneficiary trust. Each beneficiary trust can be tailored to meet the needs of the grandchild for whom it benefits. For example, a provision can provide the minimum age that the grandchild can become his or her own trustee; or in other words, the minimum age when the grandchild can be given permission to manage his or her own funds. A provision can provide as to how a particular beneficiary’s funds should be distributed in the event that the beneficiary predeceases the grandmother. Additional provisions related to marital difficulties, substance abuse, inability to manage one’s own finances, and/or susceptibility to undue influence can also be included. And in the event that a minor receives any funds, the funds within each beneficiary trust can be managed by someone else who will ensure that the temporal needs of the minor are being met, without giving the minor a “blank check” once he or she reaches 18 years of age.

The grandmother in this situation did a great job of having an initial plan in place by listing beneficiaries on her respective accounts. Some people don’t even go that far. But this grandmother did something that will benefit her grandchildren and great-grandchildren for generations to come, and that was to establish an MH estate plan. Please give us a call today if you’d like to arrange a time to discuss your family situation and determine if a similar plan is right for you.

About Morris Hall:

At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, powers of attorney, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!