How to Prevent a Child From Squandering Their Inheritance

Thoughtful Planning Can Protect Your Legacy...And Your Child’s Future

Passing down your assets is about more than dollars and cents. For many Arizona parents, it’s a deeply personal act of love—one that represents years of hard work and a desire to create stability for the next generation. But even the most responsible families worry about what could happen if a child inherits too much, too fast.

Whether your child is young, impulsive, facing addiction, or simply inexperienced with money, there are legal tools available to ensure their inheritance isn’t squandered. The key is to take proactive steps before a problem arises to protect what you’ve built and guide how it’s used in the future.

At Brown & Jensen, our Arizona estate planning attorneys help families create clear, customized plans that honor their values and safeguard their legacies. Here's what you should know about one of the most effective tools, the spendthrift clause, along with other strategies to protect your child’s inheritance.

Why Inheritances Can Disappear Faster Than You Think

It’s a scenario we see all too often: a well-meaning parent leaves a large sum to a child who isn’t emotionally or financially prepared to receive it. Within months (or even weeks), the inheritance is gone.

Some of the most common reasons this happens include:

• Lack of financial literacy: Many people simply haven’t been taught how to manage a sudden windfall.
• Addiction or mental health struggles: Money can make underlying problems worse or attract the wrong kind of attention.
• External pressure: Friends, romantic partners, or even scammers can influence how the inheritance is spent.
• Impulsivity or immaturity: A child might make emotional or extravagant purchases without understanding the long-term consequences.

This doesn’t mean your child is irresponsible or unworthy, it just means they’re human. And that’s exactly why thoughtful estate planning matters.

What Is a Spendthrift Clause in a Trust?

One of the strongest tools to prevent misuse of inherited money is a spendthrift clause, which is a provision you can add to a trust.

A spendthrift clause limits a beneficiary's access to their inheritance and specifies when and how they can access it. Rather than receiving a lump sum, the funds are managed and distributed by a trustee over time, according to rules you establish in advance.

Here’s what a spendthrift clause does:

• Protects the inheritance from creditors: If your child has debts or legal judgments, a spendthrift clause can shield trust assets from seizure.
• Prevents irresponsible withdrawals: The beneficiary can’t access or promise the money ahead of time (for example, to secure a loan).
• Gives the trustee control: A designated trustee oversees the trust and ensures distributions follow your instructions.

It’s a smart way to preserve the value of the inheritance, especially if you’re concerned about maturity, outside influence, or financial stability.

Other Trust Strategies to Protect an Inheritance

A spendthrift clause is just one option. Depending on your goals and your child’s unique needs, you might also consider:

• Staggered distributions: The trust pays out in phases (e.g., one-third at age 25, another at 30, etc.), reducing the risk of early depletion.
• Incentive trusts: Distributions are tied to specific milestones, such as graduating from college, maintaining employment, or staying sober.
• Discretionary trusts: The trustee has complete control over when and how funds are distributed, based on the child’s situation.
• Special needs trusts: If your child receives government benefits, a special needs trust can preserve those benefits while providing financial support.

Every family is different. What works for one child might not work for another. That’s why it’s so important to build a customized strategy.

Choosing the Right Trustee to Oversee the Inheritance

A trust is only as strong as the person managing it. That’s why choosing a trustee is one of the most important decisions you’ll make in the estate planning process.

You might choose:

• A trusted relative or friend who understands your values
• A professional trustee, such as an attorney or financial institution, for added neutrality
• A co-trustee arrangement, which balances personal familiarity with professional oversight

The trustee’s role is to enforce your wishes, handle distributions responsibly, and manage the trust’s investments or assets. If your child challenges the trust or tries to access funds early, the trustee has the authority to say no.

At The Law Firm of Brown & Jensen, we can guide you through the trustee selection process and offer recommendations based on your family dynamics and long-term goals.

Customizing a Plan That Reflects Your Family’s Needs

Protecting your child’s inheritance isn’t about distrust; it’s about setting them up for lasting success. Our Arizona estate planning attorneys take the time to understand your family’s circumstances and draft trust documents that are both protective and flexible.

We help you:

• Define clear goals for how you want the inheritance used
• Anticipate risks like overspending, divorce, or addiction
• Structure the trust to avoid probate and reduce tax burdens
• Name appropriate trustees and create enforcement mechanisms
• Give your child long-term financial security, without a blank check

You’ve worked hard to build a legacy. Let us help you preserve it in a way that reflects your values and protects your loved ones for years to come.

Talk to an Arizona Estate Planning Attorney at Brown & Jensen

If you’re worried about how your child might handle an inheritance, you’re not alone, and there are legal solutions available. At The Law Firm of Brown & Jensen, we take a proactive, compassionate approach to helping Arizona families plan for the future.

Whether you’re just starting to think about creating a trust or need to update an existing plan, our estate attorneys can help. We have offices in Mesa, Tucson, Scottsdale, and throughout Arizona. Contact us today for a free consultation, and let’s start building a plan that protects your child, your legacy, and your peace of mind.

"I needed assistance in setting up various trusts, doing wills, etc., and Shad helped me every step of the way. He answered all my questions (sometimes two or three times) and was very patient with me." - Brian, ⭐⭐⭐⭐⭐