When you have significant assets, you must do sophisticated estate planning to assure that your heirs and beneficiaries receive the bulk of your estate and that your assets remain protected.
One particular tool you might want to employ is a spendthrift trust. Let’s examine below just what those entail.
Protect your heirs from their worst inclinations
No one is perfect, and it’s a known fact that some folks just aren’t good at managing their money. Good money management skills are learned from childhood on, but with some heirs, the lessons just don’t seem to sink in as well.
Perhaps they struggle with dependence on alcohol or drugs. Or it could be something more mundane like a tendency to “add to cart” far too often or frequent the racetrack without first making sure the bills are paid. Regardless, spendthrift trusts can put the brakes on profligate spending patterns that could deplete the trust’s principal.
Defend the trust from your heirs’ creditors
Straight inheritance proceeds can be vulnerable to creditors in bankruptcies, lawsuit settlements and jury awards and also divorce settlements. Without the protections of a spendthrift trust and its trustee, your beneficiary’s funds could wind up in very different hands.
Will my heirs benefit from this type of trust?
Only you know your heirs and their proclivities. Some beneficiaries have no problems with unfettered access to large sums of money. But for others, it could literally become their downfall. Addressing your estate planning concerns now can provide you with peace of mind later, knowing that you have done all that you can to protect your loved ones’ futures.