“Leave your children enough money so they can do anything, but not enough that they don’t have to do anything.” That is Warren Buffet’s estate planning advice. Receiving a large sum of money can be dangerous for anyone, let alone someone young. It does not have to be a buffet-sized sum either, a few thousand can be too much for an 18-year-old to handle.
Trusts are one of the ways you can protect your children from their inheritance and protect their inheritance from them. You can set a trust up to make regular payments of a smaller amount to your beneficiaries. Thus they never have the opportunity to blow it all at once.
You can also set up trusts to provide money for future generations beyond your kids. If you left it all to your children, and they lose it, then your grandchildren would not receive a penny. A trust can keep some money back for them.
Trusts can also protect the money from creditors if you die owing money. If you put that same money in the bank, the creditors could claim against the estate, leaving your beneficiaries with less.
Estate planning is something you should do early in your life and revisit every few years. It allows you to protect your children if you die before they have the responsibility to cope with a considerable sum of money. However, if you manage to reach a ripe old age, you may realize that your kids could use the money now, rather than waiting until you die. It may help them through college or put down a deposit on a home. Seek legal help if you wish to make changes to the trust you created. South Dakota has specific regulations about this.