Many are familiar with trust fund babies, those young adults who have never worked a day in their lives and have millions of dollars at their disposal. Paris Hilton and Nicole Ritchie are popular examples of what can happened when children are given everything they ever wanted or needed through the proceeds of trusts.

Most families do not have billion-dollar estates, but there are hundreds of thousands of families struggling with how to set up the distribution of their estates without causing problems for their children. In an attempt to help their children grow into mature and independent adults, sometimes it may be best to tighten the purse strings, even after the parents have passed on.

A child may be troubled, suffering from an addiction, or may not have the ability or self-discipline to oversee his or her own finances. Proving such a child with a large lump-sum inheritance may only worsen the situation. Maybe a child is married to someone the parents mistrust and they worry that the spouse will leave their child in the lurch once the inheritance is deposited into a joint account.

Proper estate planning can be part of the solution for families wrestling with these issues. The most popular tool is setting up a trust appropriate for your family's situation. There are many types of trusts and they can be tailored to fit any need:

  • Create Incentives: If you are worried that your child will blow every penny he or she inherits, establish goals that, when met, trigger trust payments to the child. Examples may include finishing college or staying drug free. You may also structure payments to be made that match what the child earns, dollar for dollar.
  • Restrict Access: Money may not be the cause of your heir's troubled situation but it may accelerate the problem. Through a trust, you can designate how and when the money is distributed after your death.
  • Communicate: Use the trust language to tell your heirs what you hope for them. Rather than worrying about fulfilling every material want and need of your beneficiary, express that it is much more important that he or she live a meaningful and purposeful life.

Whatever you decide to do, you will need the assistance of a lawyer knowledgeable with the intricacies of estate planning law. Failure to properly set up your trust may keep your wishes from being carried out.