This is an estate planning question. I want to accomplish certain longer-term control over distribution of assets and I'm wondering if there is a standard mechanism for doing it.
Say I have a number of relatives -- Sally, Mary, and Joe -- all of whom are "retirement age" and not in good financial shape. They are my beneficiaries, and all could use as much financial help as possible. I could simply divide my estate among them, but various situations would make that less than ideal in terms of providing the most possible benefit. For example:
- If Sally dies soon after receiving her inheritance, her will leaves everything to cat charities. So most of my assets bequeathed to her would end up not being used to help needy relatives.
- If Mary dies soon after receiving her inheritance, her estate would go to her ne'er-do-well husband, who I don't like, rather than helping my other surviving relatives.
These and other situations could result in a one-time distribution of my estate not providing all of the benefits it could to the people I want to help. I'm looking for a better way to control the distribution, and adjust it later if and when conditions change. This can't really be done by asking my beneficiaries to provide for my objectives in their own wills.
It seems like a potential solution would be to provide the distribution as annual stipends divided among the still-living beneficiaries. Each year, the beneficiaries who are still alive would receive a payout. The share of the estate that would otherwise have gone to relatives no longer in a position to benefit would become a bigger pot for the remaining ones who can.
This would obviously require someone, or a financial organization, acting in a potentially long-term fiduciary role, and the rules and mechanisms spelled out. But I can't imagine that I'm the first person with a similar objective, so I assume this isn't something that would need to be invented from scratch.
- Is there an existing standard mechanism to accomplish this?
- Would it require setting up a trust?