I hear many cases of young adults wasting an inheritance, received from one of their parents, a grandparent or close relative.
It can be very tempting for someone in their teens, twenties or even thirties, particularly if they’ve suffered financial hardship, to blow the lot very quickly.
Rather than thinking about key investments which will need to be made in their future such as buying a car, a home, saving for a wedding, family or even for retirement, it’s all too easy to “buy a little happy” and opt for the short-term feel good factor, instead.
Let’s face it, very few individuals in their twenties want to consider investment or savings options. Unfortunately, once they’ve received their windfall, there’s absolutely nothing that can be done to stipulate how they should spend it.
The best way to ensure that a young beneficiary doesn’t waste your hard earned money is to place it into a trust whilst you’re still alive, with the explicit instructions that they are not to receive it until they reach a certain age. Most people prefer to use the ages of 18 or 21. However, if your child or grandchild is likely to fritter it away, this age can be increased. Alternatively, within a precatory trust, you can also state that the money is to be used for a specific purpose.