I read in the news today the musician Sting, does not plan to leave any money for his children to inherit when he and his wife die. http://www.cnn.com/2014/06/23/showbiz/celebrity-news-gossip/sting-children-money/index.html?iref=allsearch Their plan is to spend it all! If you have ever attended one of our living trust seminars you will know that is a joke at the beginning of our seminar—you don’t need an estate plan if you spend it all! But in reality how great of a plan is that? No one has a crystal ball to see into the future to know how long you will live and how long you will need that money.
Sting’s thought on inheritance is nothing new, billionaire Warren Buffet has repeatedly said “I want to give my kids just enough so that they would feel that they could do anything, but not so much that they would feel like doing nothing.”
I bring these two famous examples up because it raises an important question, if you leave money to your children after your death how do you want it distributed? There are a variety of options, and a living trust is a strategy used to hold money and distribute it to beneficiaries in a certain way. You can designate certain percentages at certain ages, or you can reward children that work hard with a distribution upon reaching certain milestones, like graduating from college or going on to earn graduate degree. Also, you can use to protect children who may need help managing their money—for a variety of reasons—maybe a substance abuse problem or creditor issues.
I am glad Sting came out and told the world he plans on not leaving anything to his children, he has opened the door to an important dialogue—if and how to leave money to your heirs.