Deciding who will receive which assets is hardly the only important decision you will have to make when you create your estate plan. Once you have made that decision, you must decide how you will gift the assets. Gifting a lump sum may not be the best idea. In fact, more and more people are choosing to stagger disbursements to ensure that the assets are not mismanaged.
In years past, it was common to leave an adult child who was only 18 or 21 years old a lump sum of money in an estate plan. In those days, however, an 18 or 21 year old was likely already working full-time, living away from his or her parents, and maybe even married with children. Today though, 29 percent of all 25-34 year olds are still living at home and the average age for a first marriage is 27 and 29 for women and men respectively. In reality, most 18 or 21 year olds these days are simply not mature enough yet to handle managing a large sum of money. Not surprisingly, this has resulted in many more people creating estate plans with an eye toward protecting assets from mismanagement by beneficiaries.
One way to accomplish this goal is to create a trust that guards the assets until the beneficiary is old enough to handle managing the funds without supervision. While you can create any disbursement schedule you wish, many people choose to dole out a small amount at 18 or 21 with another to follow around 25 and a final disbursement around age 30.
Stephen A. Mendel, Estate Planning Attorney
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