If you're single and don't have any children, you should still talk to an estate planning lawyer. In the event of your death, especially if it's unexpected, estate planning will ensure that your financial assets go where you want them. Common ideas for individuals in your situation are to give your money to any nieces and/or nephews. Many people will simply leave the money to a sibling who can give it to his or her children when they reach adulthood. Another idea is for the money to go into a trust where no one can touch it but the children once they're adults. Here are three reasons that the latter option is the better choice.
Your Sibling Can't Waste It
In most cases, your money would be safe in the hands of a sibling until your niece or nephew is old enough. However, there can be issues that get in the way of your plans. For example, your sibling might not be overly responsible with money, and could begin to dip into the funds here and there until they're depleted or completely gone. Also. the sibling may simply see the money as a windfall for him or her, and spend much or all of it in one shot. Keeping the money in trust will prevent such unfortunate circumstances.
Your Niece/Nephew Can Use It How They See Fit
If you're really determined to give a thoughtful financial gift to your niece and nephew, leaving the funds in trust is the way to go. This way, they'll be able to use the money as they see fit, whether it's to help pay for college tuition, to buy a much-needed vehicle, or even to travel the world. If you leave the money to your sibling to be given to your niece or nephew, there may be a situation in which the sibling dictates how the child is able use the money.
It May End up Being Worth More
If you can place your money in a trust that yields a good interest rate, you'll have the satisfaction of knowing that there will be more money for your loved ones by the time they can access it. If your niece or nephew is young, the money may be able to grow for several years or perhaps even more than a decade. This means that it will amount to a lot more than if you were to give it to your sibling right away.