Staged inheritance
A staged inheritance distributes an inheritance in portions at different ages or after stated intervals. For owners of businesses, real estate and private investments, the structure can specify when a beneficiary receives each portion. Practitioner descriptions include plans tied to a grantor's death and elapsed intervals, as well as plans tied to a child's ages. The schedules describe different starting points and distribution portions.
How it works
Practitioners describe delayed distributions in percentages and intervals. One schedule distributes twenty percent upon the grantor's death, one-half of the remaining balance after five years, and the remainder after ten years. The schedule measures the later distributions from the grantor's death.
Another schedule distributes twenty percent at age thirty, one-half of the remaining balance at age thirty-five, and the remainder at age forty. The child can spend the first portion and waits five years for the next distribution.
Where it shows up for owners of businesses, real estate and private investments
Practitioners describe limiting an inheritance to education, a house down payment at age twenty-seven, and a final inheritance at age fifty-five or sixty-five. Business funding outside those categories involves an application to the family bank.
Points that are easy to confuse
The described schedules differ in their starting points. One begins with a distribution upon the grantor's death and measures later portions by elapsed intervals. The other uses a child's ages for each distribution.
The portions after the first distribution are calculated from the remaining balance in both schedules. Each schedule states a separate percentage or remainder for the later distribution.
Common questions
What portions does the age-based schedule distribute?
The schedule distributes twenty percent at age thirty, one-half of the remaining balance at age thirty-five, and the remainder at age forty.
What does the interval-based schedule use as its starting point?
The schedule distributes twenty percent upon the grantor's death, followed by one-half of the remaining balance after five years and the remainder after ten years.