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Texas Spendthrift Trusts Explained

 Posted on May 08,2024 in Estate Planning

TX estate lawyerIt is common for people to spend more money than they probably should. Sometimes, this happens out of necessity, if you simply need to buy food or pay rent and do not have enough money to cover it all. Other times, it is simply a matter of mismanaging funds, for example, if someone feels like going on a shopping spree or buying a car they cannot afford because it seems like something fun to do. Regardless of the reason why, overspending is quite common in America, leaving people in debt or with bad credit. If your child tends to spend money irresponsibly, you might be worried about how they will manage an inheritance you plan on leaving them. In such cases, it might be advisable to create a spendthrift trust. If this is a situation you can relate to, speak with an experienced Flower Mound, TX estate planning attorney to find out more.

What is a Spendthrift Trust?

If you want to leave your children an inheritance to ensure they are financially stable in the future, you might feel uncomfortable with the idea of simply leaving them money in a will. Inheritances are generally left to people you hope can benefit from and appreciate them. If you have reason to worry that your children will burn through their inheritance irresponsibly without using their money in a wise and responsible manner, you might want to put some restrictions on how the money you leave behind can be used. That is just what a spendthrift trust can do.

As the grantor, or the person leaving behind the inheritance, you can:

  • Put your assets in a trust
  • Specify who the beneficiaries are
  • Appoint a trustee to oversee the distribution of assets 
  • Determine when and how the assets are to be distributed to the beneficiaries

When Does a Spendthrift Trust Make Sense?

A spendthrift trust might be advisable if you want to leave an inheritance to your children and they:

  • Tend to be involved in lawsuits
  • Suffer from conditions that impact how they spend money, including gambling problems, substance abuse, or mental health issues
  • They are too young to handle significant assets responsible
  • They have a history of irresponsible spending and impulse buying

Contact a Denton County, TX Estate Planning Attorney

If you want to leave your children an inheritance but are worried about their spending habits, ask a knowledgeable Flower Mound, TX trust lawyer whether a spendthrift trust might be a good idea. Call Colbert Law Group PLLC at 972-724-3338 to find out more.

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