Remember that at age 18, beneficiaries are deemed legal adults, and thus guardianships terminate allowing the beneficiary to have full-uncontrolled access to all of his or her inheritance. Many people simply do not want their children at age 18 receiving their entire share of their inheritance and this issue can be addressed through use of the Living Trust.
Many people believe it is this advantage of the Living Trust that outweighs all the financial benefits such as avoidance of probate and, when it applies, minimization of estate taxes. How much is it worth to avoid your children from receiving too much too soon?
Frequently, parents provide in their Living Trust that the successor trustee, who is chosen by you to act after your death, can manage the trust assets for the health, education, maintenance and general welfare of the children until they are age 25, at which time they are to receive one-half of their share, and then at age 30 when they are to receive the balance of their share. This does not mean that the children cannot receive any of the assets until they are age 25 and 30, but rather that the distribution of the assets prior to these ages, or whichever other age you decide upon, is in the discretion of the successor trustee. If the successor trustee deems it appropriate to spend up to the whole of a child’s inheritance held in trust for the child’s benefit before the child attains the age that you specify for distribution, then they may do so, but prior to that age the child does not have the right to demand a distribution.
For example, if a child is age 21, getting married and he or she wants to buy a house with their inheritance, the successor trustee may very well give the child his or her entire inheritance to purchase the house. If, on the other hand, the child is 21 and they are financially irresponsible, then when the child demands a large sum of money, the trustee need not give it to them. Having this type of provision in your Living Trust simply allows your successor trustee to hopefully make the same or similar decision that you would make, and not allow your children to receive their entire inheritance too soon.
THE PROPERLY DRAFTED LIVING TRUST ALLOWS YOU TO AVOID YOUR BENEFICIARIES FROM RECEIVING THEIR ENTIRE INHERITANCE AT AGE 18, AND ALLOWS YOU TO DECIDE ON THE AGE FOR DISTRIBUTION.