You have considerable assets to leave to your children. Two of them are very responsible with money. The third one isn’t.
You want the money to last that child for a long time. There is a way you can do that. It’s called a spendthrift trust.
A spendthrift trust is controlled by a trustee, and the beneficiary must make a request for the funds to be distributed. The trustee will review the trust agreement that you set up to determine whether the proposed use of the money is allowed. Education expenses often are a permitted expenditure. European vacations are not.
In many cases, the trustee automatically will receive just the investment income, such as interest, and not the assets.
Under the law, the trust can’t be used as collateral. For example, if the beneficiary bought a Massachusetts estate, the lender can’t tap into the trust for repayment should the loan go into default. The only funds available to pay the loan are the proceeds of the investment. This preserves the assets in the trust account.
A spendthrift trust is set up the same way a standard trust is. It just must contain the proper wording for a spendthrift provision.
You worked hard throughout your life to earn this money, and you want it to take care of your heirs for years to come. A spendthrift trust ensures that the money is there to help them and can’t be squandered on a very large shopping trip for expensive imported sports cars or year-long vacation at five-star resorts, for example. Your estate planning attorney can explain it in great detail and help you create such a trust if you decide it is right for your circumstances.