Estate planning attorneys provide assistance to people who have complicated situations with family members or loved ones who they want to leave assets to. Trusts can do many different things, but one of the key things that a trust can do is make it possible to leave an inheritance to an heir who has special needs of some type and who must be protected from potentially losing an inheritance.
Trusts can be used to leave money to an underaged beneficiary so a child who is 18 doesn’t just receive a large sum of money without any conditions on the cash or guidance for its use. Trusts can also be used to leave money to a disabled beneficiary who might not be able to manage the trust assets and who could potentially lose access to means-tested benefits if a financial gift is given directly.
In addition to these situations, trusts are helpful if you want to leave money to an heir who is not responsible with spending. There are different kinds of trusts that you can use to do all of these different things, and you’ll need to first determine if a trust can help you to accomplish your goals and then move forward with selecting the right kind of trust and following all formalities for the trust creation process.
SinclairProsser Law can help with every aspect of this process. Our legal team can work with you to determine what options you have available for leaving an inheritance to someone in your life who you do not think can manage the money due to irresponsible spending or for any other reason. Give us a call today to find out more.
Options for Leaving Money to an Irresponsible Heir
If you have an heir who is not responsible with money, leaving him a large inheritance can be a very bad idea. Your loved one could end up spending too much of the money all at once, leaving him without anything to enrich his life going forward. If creditors are making claims against your loved one because he has debt, the assets that he inherits could potentially be taken by those creditors so your loved one would not have an opportunity to benefit from the inheritance. Money could also be lost due to mismanagement of investments and property, even if the heir doesn’t try to squander the inheritance.
You work too hard for your money to have it lost quickly by someone who isn’t responsible with finances. However, you may still want to leave your assets to a person who is bad with money — while simply making sure the money is not wasted. A special type of trust called a spendthrift trust was created for just these purposes.
When you create a spendthrift trust, you will name your loved one who is irresponsible with spending as the trust beneficiary. You will then name a trustee who is put in charge of actually managing the money and the property that you transfer into the trust. The trustee will have a fiduciary duty to manage the money in a responsible way for the benefit of the beneficiary. You can select virtually anyone you want to serve as the trustee of the trust, so you can select a person who you are confident will be good at protecting the assets that you have put into the trust.
You can then provide specific instructions in your trust document for when and how money is to be provided to your heir who is not responsible. You can dole out the money in increments over time, or set conditions that must be met before the beneficiary inherits, such as requiring the beneficiary to be married or to graduate from college before receiving an inheritance.
Because the beneficiary will not have access to the assets held within the trust, creditors won’t be able to take those assets and the beneficiary will not be able to waste all of the money at once.
SinclairProsser Law has helped many individuals and families to make inheritance plans that work for their unique situations. To find out more about the many ways that trusts can be used to accomplish a versatile array of estate planning goals, join us for a free seminar .
You can also give us a call at 410-573-4818 or contact us online to get personalized advice on what type of trust is right for you and to get help creating your trust. Give us a call today to get started, as you never know what the future will hold.
Latest posts by Nicole Livingston, Estate Planning Attorney (see all)
- Basics of Estate Planning: Privacy and Estate Planning - April 12, 2018
- What Services Do Estate Planning Lawyers Provide? - March 15, 2018
- What are the Most Important Estate Planning Tools to Use? - February 16, 2018