There is an emerging trend among socially conscious young people who inherit money to give away large portions of their wealth to charities. The young philanthropists often say that because they did not personally earn the money, they find keeping it to be unfair. Donating or otherwise giving away a large portion is an effort to level the playing field in their own small way, says a spokesperson from Resource Generation, a group for young inheritors.

While it does sound exciting and altruistic to give away one's inherited wealth away at a young age to try to make the world a better place, most financial and trust advisors recommend a more measured approach. Slowly dolling out portions of an inheritance can allow the trust beneficiary to give more thought to each cause and to react to changing times and emerging needs. At the same time, the beneficiary's own situation will likely change over the years, with the decision to have children, get married, or purchase a home, and reserving some of the inherited wealth for those possibilities is often one of the main intents when a parent or grandparent establishes a trust.

In fact, many trusts include “brakes” in their terms, designed to prevent hasty spending on either personal expenses or charitable causes. Depending on the precise terms of the trust, a trustee will have varying degrees of discretion over how and when the money can be distributed. For parents or grandparents who are considering establishing a trust for future generations, it is important to consider the precise terms and the boundaries of distributions. Some people choose to leave a trust without restrictions, leaving discretion to the beneficiaries, while others feel that future generations may need a guiding hand to help manage such a life-changing gift.

Source: The New York Times, “Among Young Inheritors, an Urge to Redistribute” Paul Sullivan, March 25, 2013

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