Even if you don’t have children or grandchildren, you want to protect your beneficiaries. You’ve worked too hard for your money to ignore this issue and let somebody else decide what happens to your treasure once you are gone.
I recently read an article about a grandfather (we’ll call him Bill) who left a large sum of money to his grandchildren. Unfortunately, Bill’s son Jerry (the father of the grandchildren) thought it would be a good idea to spend that money on a vacation home rather than save it for the kids’ education.
It goes without saying that Jerry is a jerk. But Bill may have been an even bigger bozo than his son. Before I explain why, I need to give you some background.
How To Protect Your Family
If you want to leave a specific amount of money to a specific person for a specific purpose, one smart way to do it is to set up a trust. Within that trust, you name your beneficiary and the gift you want to pass along to them. Simple.
If you were in Bill’s situation, you would name the grandchildren as beneficiaries of the trust since they are the people who you want to benefit eventually. You also need to select a trustee — someone who will manage the assets as the trust spells out. It’s pretty important to name a trustee you trust.
Had Bill set up a proper trust (using a lawyer or a self help legal service like Legal Zoom) Jerry never could have blown the bucks on a vacation home. Bill knew his son. Why did he name him as trustee? Even if Jerry had been a good, trustworthy son, Bill’s trust should have spelled out exactly what the trustee could and could not do with that money. Then, if Jerry did something counter to his responsibilities, he’d be liable for it in a court of law.
So Bill had two chances to safeguard his grandchildren and he blew it. Am I being too harsh?
I do know that the world is full of “Jerry’s” out there and you can’t do much about that. But you can do a lot to make sure those clowns don’t have a chance to play with your money — or ruin your family’s financial future.
It’s really easy to blame someone else for being irresponsible. But it’s much more effective to look at myself and make sure I’ve done everything I can to fulfill my responsibilities — regardless of what others have done.
What say you? Have you had any experiences like this?