Working hard and being financially fortunate in life gives you more options than if you are cash-strapped. If you grew up in a family that lived modestly, your parents may have modest savings and an economically lower-quality lifestyle than you currently have. If you have made some good investments and good choices and are financially well off, helping your parents may be at the forefront of your mind. If you are interested in helping your parents but you want to make sure that the money is spent wisely, you can set up a trust for your parents to live off of. Here are three ways to help operate a trust for your parents:
Agree to a confidential trust
If you have siblings or a large family, there is always the chance that the trust that you set up for your parents can cause trouble. This trouble could be due to others wanting to be involved in the money or others becoming envious. If you want to skip any possible problems, you should set up a trust that is confidential. This means that no one else can receive, or are privy to any information about the trust besides you, your parents, and the lawyer who is set up as the administrator of the trust.
Set up specific withdrawals
If you set up a trust with an attorney, you can make some rules and stipulations for how the money is spent. If you want to make sure that your parents have money to live off of or money for medical needs, set up a regular payment schedule. This can be a certain amount of money each month or it can happen when they submit receipts or invoices for certain needs. A lawyer running the trust as a neutral third party makes sure that everyone's best interest is looked after.
Make it a Spendthrift trust
If your parents hard times have been largely due to poor financial decision-making, it can be best to make sure that they don't get the chance to spend money unnecessarily. If you think that there is a chance that your parents will spend the money in the trust unwisely, you can create a spendthrift trust. The spendthrift trust means that the lawyer makes the decision on where the money should go. If your parents are completely broke, have a lot of debt, or are on the brink of bankruptcy, having an attorney determine how the trust will be spent can keep you and your parents on good terms, but make sure that your money is used wisely.
Contact a company like Kelm & Reuter, P.A. for more information and assistance.
