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As part of the process to develop your estate plan, one of the important questions you will be asked is whether you want to give your assets outright to your named beneficiaries or place limits on how and when the money can be used by them in the future.  Placing limits on an inheritance is generally done by using trusts for the various beneficiaries where you decide the terms and condition upon which they can use the money.  Doing so is often referred to as “Dead Hand Control” as you are continuing to control your wealth from beyond the grave!

For example, your estate plan includes the following provision:  “I leave 50% of my estate in trust for my granddaughter to be used for her health and education until age 25, as which time she shall receive the balance and the trust shall terminate.”

You are effectively only allowing the money to be used for educational and health expenses while your granddaughter is under 25.  If she needs a car, that likely would not be covered, but any tuition, room and board would be.  Ultimately when she turns 25, whatever balance is left in the trust will be distributed outright to her and she can then do whatever she wants with the money at that time.

Ultimately, it is up to you to decide and know the situations for your beneficiaries; however, there are some situations where you should strongly consider using trusts with terms and conditions rather than leaving money directly to a beneficiary:

  • Young or Minor Beneficiaries
  • Special Needs Beneficiaries that are receiving governmental benefits (outright distributions may disqualify them from those benefits)
  • Beneficiaries with addiction issues
  • Beneficiaries that are not good with managing money or have significant creditors and
  • Beneficiaries that may get divorced in the future

Whatever you ultimately decide, it is important to work with an estate planning attorney to ensure you understand the impact of your estate plan and that the terms and conditions you establish will carry out your estate planning goals.

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12700 W. Bluemound Rd.
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Elm Grove, WI 53122

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