(Spoiler: It’s not good.)

A few years ago, a potential client came in devastated. Her mother had passed, and she’d just discovered that her younger brother — 19 years old, a sophomore in college, zero financial skills — was getting a $500,000 inheritance.

All at once.

Within six months, he had dropped out of school, leased a luxury car, started “investing” in crypto, and generously funded the social lives of half his dorm. By month nine, the money was gone. All of it.

She was trying to provide guidance and help him use his inheritance to create future opportunity (invest for retirement, buy a house, etc.), but it always devolved into a fight and her brother yelling at her that she wasn’t his mom.

Now they barely speak.

She now has kids of her own and wanted to make sure the same thing didn’t happen to her family if something happened to her (and advice on how to repair the relationship with her brother – which we were happy to provide).

We were happy she called, though we wish she wouldn’t have had to learn this lesson the hard way.

The truth is: most people aren’t ready to handle a large inheritance at 18 or 21 — no matter how “mature” they seem.

A well drafted estate plan allows you to set the terms on when and how your kids receive money based on your family and your philosophy (for example, if you think it’s totally okay for your 19 year old to get $500k then that’s okay).

And yet most estate plans default to dumping it all at 18 or 21 (and if you have no estate plan they get everything at 18).

That’s not planning.

That’s crossing your fingers.

A better move: Use age-based distribution schedules. Like…

• Until 25, distributions can be made on a discretionary basis by someone you put in charge (who would be the Trustee) for things they actually need (school/medical/rent/etc.);
• At 25, up to 1/3 becomes available upon request;
• At 30, another 1/3 becomes available; and
• At 35, all assets are accessible.

And, a fun side benefit of this structure is the assets in the trust have significant asset protections for your kids (think lawsuits, divorce, etc.).

At the end of the day, it’s not about control for control’s sake.

It’s about giving your kids time to grow into their money, instead of watching them blow through it and regret it forever.

Want help putting a real plan in place?