If you have a loved one in your family with questionable or perhaps negligent spending practices, you may feel concerned about them wasting their inheritance. You worked hard and saved to leave something behind for your family, and the last thing you want is for them to squander your final gifts.
Under California estate planning law, you have several trust options to choose from when protecting your family. A spendthrift trust can ensure your financially irresponsible heirs cannot waste away your bequests.
How do spendthrift trusts work?
The purpose of all trusts is to ensure that your estate assets benefit your loved ones in the long term. If you have concerns about financial mismanagement, a spendthrift trust can bring you peace of mind. Your heir cannot access the property in a spendthrift trust directly. Instead, a trustee with the discretion to control the timing and size of disbursements manages these funds.
Three benefits of spendthrift trusts:
- Protects your estate assets from overspending
- Ensures heirs or beneficiaries cannot access funds all at once
- Prevents creditors from taking the assets held in spendthrift trusts
The assets in these trusts are generally well-protected from invasion by lawsuits and creditors. However, if the beneficiary owes child support, the Department of Child Support Services (DCSS) may have the right to collect overdue payments from the trust.
As you can see, spendthrift trusts may be the right approach to protecting your estate and your spendy loved ones from squandering their inheritance. We urge all Napa residents to learn more about this and other trusts to maximize asset protection for your estate and your cherished family members.