For some Philadelphia families, estate planning is not a simple matter. In cases where one child is struggling while his or her siblings are thriving, it can be difficult to know how to best pass on an inheritance. Some families consider annuities and trusts as estate planning options but are unsure of which path to follow.
In the case of annuities, an adult child who has addiction issues or who struggles with financial irresponsibility would not receive the full value of his or her inheritance at any one given time. The annuity would pay out over the course of many years. This ensures that the beneficiary will always have access to a source of funds. However, annuities are inflexible and cannot be reversed once annuitized.
Another option lies in the creation of a trust. A more responsible sibling or other family member could be granted the authority to manage the trust, with the adult child named as the beneficiary. A trust offers greater flexibility than an annuity, and it would be possible to access a lump-sum from the trust if that need should arise. However, this approach places a heavy burden on the family member tasked with managing the trust and could lead to friction within the family.
Deciding between trusts and annuities can be a challenge. For Philadelphia families who are looking into these and other estate planning options, it can be helpful to meet with an estate planning attorney. An attorney can provide families with the pros and cons of these and various other choices and help the family decide upon a course of action that meets the needs of all involved.
Source: hometownlife.com, “Try to maintain flexibility in estate planning“, Rick Bloom, Aug. 28, 2016