The problem: Setting up a trust for someone you don't fully trust with money. Here's what The Moneyist thinks.
My 84-year-old wife and I are trying to deal with how we revise our wills. Meanwhile, my wife’s daughter was kicked out of her apartment and fired two weeks later from her position at a multi-doctor clinic after 19 years. We have not been able to determine the reasons for her firing other than what she has told us.
Given our knowledge of her current financial needs, and a 30-day record of cash inflow and expenditures, we’re unable to account for approximately $1,400 to $1,600, some of which would have been spent on food. We suspect she is using drugs, but have no proof aside from these discrepancies. We all know that past behavior is the best predictor of future behavior, but even if your stepdaughter remains sober and/or gets sober, and stays that way, inheriting $1.6 million would be a huge burden for a person who has had difficulty managing her finances and her life. Stagger any payments. You need to figure out what you want to leave behind, and give yourself and your wife peace of mind that she will be taken care of after you’ve gone.
One option: an irrevocable trust that specific language that addresses income and principal distributions. It should also name a trustee other than your stepdaughter or other relatives/friends. Preferably name an independent corporate trustee. You could set up an education trust fund or some other funds that could motivate your stepdaughter and help her achieve her goals.
After you have addressed this, keep all parties involved and, perhaps, think about other ways you could posthumously put a percentage of your estate to good work.
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