A recent article in Reuters noted that a growing number of parents are requiring that their heirs be older before they can collect their inheritances. The article cites a recent WealthCounsel survey in which 35% of those making their estate plans are motivated specifically to avoid mismanagement of the money being left to their heirs. These people are setting up trusts, naming third-party trustees and delaying the age at which heirs receive their inheritance.

Historically, trusts were liquidated and paid out when heirs reached age 18, 21 or 25. Now those ages have been going up and up and are more likely to be 30 or 35.

What Has Changed?

One explanation is that kids may be maturing later, because major life events – like leaving home, starting a steady job, marrying and having children – are all happening later. Roughly 29% of adults ages 25-34 are currently living with their parents. In 1980, that number was only 11%. Similarly, the average age for a first marriage has also increased to 27 for women and 29 for men.

Why the Concern?

Baby boomers who are planning their estates right now are worried that the younger generation might squander their inheritances. Although a parent may provide for payment of student loans or the purchase of a home for an heir, they are more often using a trustee to make key decisions about how and when to distribute the money. This can also protect an heir from his creditors or from an unfavorable divorce judgment. Some people are so concerned about their children’s lack of savings that they are delaying the inheritance until the child reaches age 65. That way, Mom and Dad can ensure that their child will have a nest egg to use for retirement.

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