On June 25, 2009 actress and icon Farrah Fawcett passed away in Santa Monica, California leaving behind one child. Her only child, Redmond O’Neal, inherited $4.5 million, with the remainder of the estate going to Fawcett’s nephew, father, and a former lover. Rather than giving O’Neal his inheritance in one lump sum, Fawcett arranged for the funds to managed through the use of a revocable living trust with producer Richard Francis acting as trustee.
Initially some questioned why the actress would restrict her only son’s access to his inheritance, but the young man’s struggle with drug addiction and legal troubles have led most to speculate that Fawcett wanted to protect her son. Even if you do not expect to leave behind a multi-million-dollar estate, a trust fund with restrictions is something that you may want to consider. Knowing how trust fund restrictions protect your heirs will help you decide whether they are something you will need.
Allows Minors and Young Adults Time to Mature
Giving a child a large amount of money and hoping that they spend it wisely is not generally a good idea. A child or very young adult typically has no knowledge of money management and receives most of their advice from people his or her own age who are similarly uneducated. Creating a trust fund that is managed by another until the child reaches a certain age or has certain stipulations regarding use gives your child valuable time to mature. Letting a child become an adult before giving that person control of the funds you left increases his or her chances of making responsible decisions regarding the inheritance.
Prevents Others from Taking Advantage of Them
Whenever a person comes into a sum of money of any size, there are money-hungry people standing by to take advantage of the situation. While placing restrictions on a trust fund may not be something that your heirs like, it will make it difficult for the people around them to take advantage of them financially. Once those circling and waiting for an opportunity to benefit realize that your heir cannot access the money you left behind, they will most likely stop their predatory actions.
Keeps Money From Going Too Fast
There are numerous stories of people coming into a great deal of money, spending the money in a short period of time, and ending up penniless or in overwhelming debt. Former working-class man Nathan Kinkler made international headlines after becoming a billionaire through a wise investment only to go bankrupt in 12 years later with $2,000 to his name and millions in debt. Adding provisions to a trust based on your heir’s history of fiscal responsibility can help prevent this situation. Giving your heir a small percentage of the trust monthly or annually is an option, as is restricting use of the funds to education, medical care, or basic necessities.
Talk to an Attorney
Speaking to a trust administration attorney is the best way to determine what options are best for your unique situation. The team at MMZ Law is here to answer your questions and help you decide if establishing a trust is best for your heirs. Contact our Claremont, California office today to schedule a consultation so that we can begin discussing your needs.
BROUGHT TO YOU BY:
MMZ LAW, A PROFESSIONAL CORPORATION
341 W. 1st St. Suite 100
Claremont, CA 91711
MARIVEL M. ZIALCITA is the founder of MMZ LAW, A Professional Corporation, where she practices in the areas of Elder Law – Medi-Cal Planning Asset Protection, Trust & Estate, Special Needs, Conservatorship, Trust Administration, & Probate. Ms. Zialcita is a frequent speaker on trust and estate matters and holds memberships in the State Bar of California, Trust and Estate Section, The San Bernardino County Bar Association, Wealth Counsel and Elder Counsel. She currently assists in the pro bono legal services program at the James L. Brulte Senior Center in Rancho Cucamonga, California. She is based in Claremont but assists clients throughout Southern California.
This information is educational information only and not legal advice.