Who’s going to get your money after your death?

Many people devote a great deal of attention to estate planning to make sure their money goes to the people they want it to. If you die in your eighties or nineties, chances are your children will be in their fifties, sixties, and seventies — and they can probably handle a lump sum inheritance.

But what happens if you have children in their twenties or teens — or even younger? Do want your life savings handed to such a young person?

This is where estate planning gets a bit more dicey. A lot of people don’t want someone under thirty to receive a large sum of money because they’re concerned about how the child will handle it. This concern, in turn, causes many people to attempt to manage their assets from the grave.

In our financial planning practice, we’ve seen people create trusts that feature rules determining when and how their money is dispersed to heirs. Some trusts include specific restrictions, such as saying an heir gets the money only after he/she marries, has children, buys a house, graduates from college, or starts a business. Clearly, many parents try to control their children, or at least the distribution of their assets, from the grave.

Yet, as we try to convince those who engage in these efforts, this is usually a wasted effort. It’s extraordinarily difficult, if not impossible, for you to effectively and completely control your assets from the grave, no matter how hard you try.

For example, if you stipulate that your trust can give money to your child only if it is used to buy a house, then that’s exactly what the child will do: He’ll buy a house. And not just any house, but a very expensive house. For cash. And then, he’ll sell it. Nice try, Dad.

Say you require your child to marry before receiving any assets. Fine. It will soon be followed by divorce. Good going, Mom.

Want to make sure your kid graduates from college? He’ll get a degree from a “diploma mill” faster than you can roll over.

Want to know how I know this? Because we’ve seen all these incidents happen — and more. Bottom line: If heirs want access to their inheritance, they will find a way to get it, despite your best efforts. The most you will be able to do is ensure that much of your money is squandered on legal fees.

Don’t try to manage your assets from the grave. Don’t try to manipulate your heirs’ behavior. Instead, inspire their behavior while you’re alive. Prepare your children now to become responsible adults. Then, through your teaching and your example, you’ll truly accomplish your goal.

If you insist on restricting access to the inheritance (that’s not a bad idea if the heirs are young or immature), the best way is to have your trust state how much money the child is to receive at a given age. Thus, don’t say the money is to be used for college. Instead, envision how much money the child will need for college, and the age you expect him or her to attend — and then make that amount of money available at that time. Ditto for buying a home. Although this means you can’t be certain the money will be used for the intent you have in mind, nothing you say now is certain to become reality later, so get over it. After all, once you’ve died, it’s no longer “your money;” rather, it’s “their inheritance.”

So, make your trust-writing easier, and simply decide how much they’re going to receive at specific ages. Don’t waste your time trying to restrict how the money is to be used.

Two final points: First, you might prefer to distribute your assets periodically, rather than in a lump sum. By spreading out the inheritance over an heir’s lifetime, through once-a-month or even once-a-decade distributions, you reduce the risk that an heir might squander the entire proceeds. (And if one payment is frittered away, maybe the experience will help them avoid the error with later distributions.)

Second: Please do not give your trustee discretion in how, when or why the money is to be distributed. If the trustee has discretion, the heir is likely to file a lawsuit the first time the trustee refuses a request. If that happens, your assets will be squandered on legal fees, your trustee’s life will be miserable, and your family will be very unhappy.

Teach your heirs to be responsible while you’re alive. Don’t try to preach it from the grave.