My parents left me a huge inheritance when they passed away last year. I am just 22 and I don’t think I have enough experience and know-how to manage that kind of money yet. I want to take a few years to further my education and pursue my passion. How can I secure my inheritance while I’m away?
I commiserate with you on the passing away of your parents. Your ability to pick yourself up and address issues from a rational perspective despite your loss is commendable. So is your desire to further your education, regardless of your buoyant financial status.
While it is great that you have chosen to pursue a future of your own, it is important that you appreciate your parents’ sacrifice and kind gesture in leaving you an inheritance. This gesture confers a huge responsibility on you, bothering on the preservation, judicious use and growth of the assets that now belong to you.
For instance, if your inheritance includes functional organisations or property that require maintenance, the responsibility now rests squarely on your shoulders. You would have to keep an eye on operations, ensure the business continues to run, salaries are paid as and when due, maintenance policies are put in place among many other necessities. If your inheritance is liquid as well, the wise thing to do is to ensure it keeps growing via profitable investments and proper handling.
However, it will be extremely difficult, if not impossible to do all of these while you are away studying and charting your own path in life. In order to guarantee the preservation and growth of your inheritance without interfering with your plans and activities, you should seriously consider setting up a Trust.
A Trust can be defined as any arrangement whereby assets (such as your inheritance) are transferred by you as a Settlor (creator of the Trust) into a Trust with the intention that the Trust is to be administered by the Trustee for your benefit and the benefit of any other persons or entities that you so choose.
A corporate trustee (such as ARM Trustees) would have the capacity and experience to manage your inherited assets whilst you focus on your education and pursue your passion. A part of the income on those assets or a portion thereof would be transferred to you periodically until you complete your education or until any stated future time.
The Trustee would provide you with periodic reports on the management of your assets and may also take instructions on the management of the assets from you, where necessary.
You may choose to make the Trust a Revocable Trust so that when you believe that you are ready to fully manage your inheritance, the Trust may be terminated and the Assets would be transferred back to you.
Should you require further information and guidance about how to set up a Trust or Investment opportunities to consider for the preservation of your assets, please write to me. I will be glad to help.