One way to leave an inheritance is simply to put it into a will. Perhaps you have $100,000 that you would like to leave to one of your grandchildren. You could simply write in the will that they should obtain those assets when you pass away.
But if you do that, you don’t have any control over how your grandchild decides to use their inheritance. Maybe you envisioned them using the money to pay for college tuition, start a small business or buy a home for their family. You know how helpful $100,000 can be to a young person. But nothing is stopping them from spending it on a new car, going on vacation with their friends or other things of this nature. How can you take steps to control how they spend the money?
Putting the inheritance in a trust
The way to do it is to put the inheritance into a trust, rather than leaving it directly to that grandchild.
For example, you can establish a trust that has a specific purpose, like helping someone pay for college tuition. They still get to access the funds, but the trustee checks to ensure that they are being used for college costs. The trustee would not authorize payments for other costs, meaning that your money would be used as you wished.
You can also use a discretionary trust. This works similarly, but the trustee gets to use their own discretion, rather than being told that the trust is only for one purpose. But they still get to approve or deny purchases, so you can pick someone that you know will be a good influence on your grandchild.
A trust is just one estate planning tool that you can use. Be sure you carefully consider all of the tools you have at your disposal while making your plan.