In some cases, when someone establishes a trust, it is for a specific goal. They have an outcome they have identified, and they want to create the trust to ensure that it happens.
For example, a grandparent may want to set up a trust to cover the college tuition costs of one of their grandchildren. Or someone who has a beneficiary with special needs may want to create a special needs trust, ensuring that they do not accidentally disqualify that person from government benefits by leaving them the inheritance directly.
While these types of trusts can certainly be useful, it is important to remember that a trust can also be focused on age, determining when assets should be distributed.
Spreading out the inheritance
For example, a parent may establish an estate plan while one of their children is still a minor. They could say that the child gets 25% of their inheritance when they turn 18, another 25% when they turn 25 and the final 50% of the inheritance when they turn 30.
In this situation, the goal is simply to delay the inheritance or spread it out over time. The parent may be worried about leaving a major inheritance to an 18-year-old, so they delay the payments until the beneficiary is older.
But the parent does not have to give any specific instructions for how the money in the trust should be used. The beneficiary is fully able to use the money in any way that they see fit, but the trustee does not make the distributions until the predetermined ages.
Setting up a trust
Trusts can be created in many different ways, depending on the family’s individual dynamics and what the grantor wants to accomplish. It is important to know what options are available and what legal steps are necessary to officially establish the trust.