When an Illinois estate planner is worried that his or her heirs cannot handle receiving a large sum of money all at once, a spendthrift trust could be appropriate. A spendthrift trust will dole out your heirs' inheritances to them slowly over time -- perhaps in monthly distributions -- so that there's less danger of your heirs mismanaging the money and spending it irresponsibly on frivolous expenditures.
When properly done, a spendthrift trust will be supervised by a trustee. Often the trustee will be either a trusted individual or a financial institution that will manage the money you leave behind and slowly dole it out to your heirs. For example, you might designate a financial advisor to serve as the trustee of the spendthrift trust. That advisor will see to it that the assets inside the trust are invested safely so they generate income for the beneficiary.
The structure of the spendthrift trust prevents the beneficiary from gaining access to the trust assets unless they are distributed to him or her according to the plan. The trustee will be charged with determining the trust payments that are necessary as per the terms of the trust.
There is a lot of flexibility that estate planners can use when crafting a spendthrift trust. Perhaps, for example, you will have monthly distributions made to the beneficiary until he or she turns 30, and then the beneficiary will gain access to the full amount of the trust. Whatever your family's needs and situations, your estate planning lawyer can assist you in determining the best way to organize a spendthrift trust to suit your needs.
Source: The Balance, "How a Spendthrift Trust Can Protect Your Heirs from Themselves," Joshua Kennon, accessed Sep. 29, 2017