Should I set up an inheritance trust for my wife? My reasoning is that she doesn't like handling money. Is my thinking sound?
Your motives to preserve assets for your wife and to provide for her future are commendable. You know your wife best. If you have a feeling that she might be susceptible to losing those assets in some way, or if the responsibility of having to manage them would place an undesirable burden on her, then a trust is an excellent vehicle for safeguarding her security and peace of mind.
An anecdote will serve to illustrate the prudence of your plan. We know of a case where a widow was left with $1 million. She moved to Arizona and later married a golf pro who lived at the same senior community. He persuaded her to change the title of her assets so that they were in his name only. You can see what's coming – he eventually left her. Of course, he didn't leave the assets. He took all of her wealth, and legally she could do nothing to recover it. If her first husband had set up a trust with some protective provisions, this might never have happened.
Trusts, then, can be a useful way of providing for the needs of loved ones and dependents after your death. But they shouldn't be utilized without careful consideration and analysis of the specific situation. Too often people use the tool of the trust merely because they never applied the wisdom principle. In other words, they never took the time to teach their heirs to handle assets responsibly. Don't rely on a trust simply to transfer wealth to an individual who is irresponsible, untrustworthy or lacks wisdom. The best approach is to communicate sound financial principles and develop character in the recipient while you are still living. You may, of course, still choose to make use of a trust for the sake of convenience or to help an heir or recipient who has no experience or expertise in the field of investment.
If you could use further information and guidance, please don't hesitate to give our Gift and Estate Planning staff a call. They would be happy to listen to your concerns and assist you with some practical suggestions. You can contact them Monday through Friday between 8:00 a.m. and 5:00 p.m. Mountain time at (800) 782-8227.
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