Many people worry that their heirs won't spend their inheritance wisely, and with good reason. According to a recent study at Ohio State University, the average baby boomer had spent, donated or lost approximately half of his inheritance in the first 12 months after receiving it.

A Trust May Be Your Answer

If you are concerned that your heirs will squander their inheritance, or that their creditors will grab it, it is important to create a trust. The trust can include instructions on how and when money will be paid to an heir. For example, the trust can provide that a child gets part of his inheritance at age 25, some at 30 and the balance at 40. The amounts that are distributed can be smaller when the heir is younger and grow larger as he matures. Or the trust can provide that the inheritance is based on a milestone such as completing college, getting married or buying a house.

More Trust "Super Powers"

A trust can also include a "spendthrift" provision. This prevents an heir from "selling" his inheritance for immediate cash or losing his inheritance to a creditor. There are also provisions that address what happens if the heir is in the process of a divorce.

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