If you leave someone an inheritance using your will, it is a relatively straightforward transfer. You may choose to leave a certain beneficiary $100,000. The estate executor helps guide the process of taking the estate through probate and distributing the inheritance to that beneficiary, who may simply receive a check for the full amount.
But you may also be concerned about leaving that money to a certain beneficiary based on their age. Maybe one of the beneficiaries you have selected is a college student, for example. They can inherit money because they are a legal adult, but you still have some concerns about how they would use such a large inheritance at a young age.
Spreading out the distributions
By using a trust, you can delay and spread out distributions.
For instance, you could put the theoretical $100,000 into the trust and specify that the beneficiary has access to $10,000 right away. They receive the next $40,000 when they turn 25, and they get the final $50,000 when they turn 30.
One reason people do this is because they feel like it releases the money to the beneficiary at times when it can be most helpful. They are less likely to waste the money at 30 years old, for example, and more likely to use it as a down payment on a family home or to start a small business.
Setting up a trust
This is just one example of how you can use a trust to dictate the terms of an inheritance. Be sure you know what legal options you have while setting up an estate plan.