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Do my kids' inheritances need a spendthrift clause?

For parents, creating an estate plan includes more than creating a living will, signing a few powers of attorney and deciding what kind of burial is preferred. Having children and even grandchildren typically means planning what kind of inheritance to leave behind. However, many parents in California are increasingly concerned about their children's spending habits and how that might affect their inheritances.

Spendthrift provisions are not a necessity when leaving an inheritance via a trust, but they can be useful in certain situations. This type of provision prevents a beneficiary from assigning the rights and assets contained within a trust to any type of third party. Usually, a spendthrift provision is included when a parent has a concern about debt that a child might owe a creditor.

In the absence of these concerns, a trust by itself is usually sufficient for parents concerned about their children's spending habits. With a trust, parents can set boundaries around the inheritance and restrict access to the funds. A trustee is in charge of administering the funds according to the trust's instructions.

Even parents who have done their best to impart solid, financial wisdom on to their children can still have serious trepidations when it comes to leaving a lump sum inheritance. Most people in California work a lifetime to acquire their estate and do not want it to disappear once it hits the hands of their children. While a spendthrift provision is not necessarily useful in every situation, parents who are creating their estate plan can evaluate what would be in the best interests of their children when creating inheritances.

Source:, "How to plan for spendthrift children", Karin Price Mueller, May 5, 2016

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