Ask the Retirement Expert: How Do I Prevent My Grandkids from Spending All the Money I Leave Them?
By Elizabeth Taylor, former Director – Estate Market in the Specialty Markets Division
Each week our Northwestern Mutual retirement experts answer your questions. This week’s question:
I want to leave money to my grandkids, but I’m worried they will spend all of it. Can I prevent that?
This is where a trust fits perfectly. A trust allows you to specify the circumstances under which your grandkids receive the money. For example, you can specify that they get the money only when they reach a certain age or that they receive it only for specific purposes (like for school tuition, to buy a house or to start a business). In fact, you can specify pretty much whatever “rules” you’d like in terms of when and how the grandkids receive or can use the money. In addition, you can name someone, referred to as the trustee, to manage the money. The trustee has to follow the “rules” you specify. All this—the “rules” and the trustee—are specified by you in the trust document.
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