Glastonbury estate planning attorneys offer guidance to individuals who are making an estate plan and who need to go beyond the basic plan in order to provide special protections for heirs or beneficiaries. There are many reasons why you may need to take additional steps in structuring an inheritance or financial gift to an heir. You may have a disabled child you want to leave money to, for example, or may want to make a financial gift to a child under 18 and put a specific person in charge of managing the money until the child is old enough.
While there are a lot of different reasons you’d need to use estate planning tools to maintain at least some control over assets in order to protect heirs or beneficiaries even when you have passed away, one especially common issue that arises is that you may wish to leave funds to someone who is simply irresponsible with money. If you have a child or other loved one who you want to leave an inheritance but you are worried about that person squandering the wealth that you worked so hard to build, this puts you into a difficult situation.
This is a problem that Nirenstein, Horowitz & Associates can help you to solve. Our Glastonbury estate planning attorneys can offer you guidance on the effective legal steps you can take to give an inheritance to a person with bad spending habits while still keeping the money or property safe. Give us a call today to find out how our legal team can assist you in making sure your loved one is provided for without taking a chance on a financial gift being lost right away.
Risks When Leaving an Inheritance to a Spendthrift
If you leave money to someone who is bad at managing the money, the inheritance is likely to be squandered and lost. Creditors of the person who inherited could make a claim to try to take estate assets for debt repayment once the spendthrift has inherited if he is badly in debt and not paying the bills. If the spendthrift heir goes bankrupt after receiving an inheritance, the wealth that was left to the heir could be lost in the bankruptcy. The money could also be simply spent very quickly, with nothing to show for the cash.
How You can Keep an Inheritance Safe with Irresponsible Heirs
Because the problem of spendthrift heirs is such a common one, there is actually a specific type of trust that is designed just for this situation. It is called a spendthrift trust and it allows you to name the irresponsible heir as a trust beneficiary while choosing someone you can count on as a trustee.
When you create a spendthrift trust, you transfer the assets that you want to leave to the irresponsible beneficiary into the trust. You name a trustee to manage those assets, and the trustee will have a fiduciary duty to manage the wealth in a responsible way that is focused on doing what is best for the beneficiary. You can provide specific instructions in your trust document for when and how money is doled out by the trustee to the spendthrift heir.
You could provide a regular distribution of money to the beneficiary, which is similar to an allowance, or could impose specific criteria or conditions for when trust assets can be distributed. Because the spendthrift trust beneficiary never has actual access to all of the money and property, creditors cannot just take the trust assets and the trust assets cannot be lost in a bankruptcy. The beneficiary also cannot just spend all the money at once and have nothing left to show for it, since the trust assets are distributed over time.
Getting Help from Glastonbury Estate Planning Attorneys
Glastonbury estate planning attorneys at Nirenstein, Horowitz & Associates can work with you to make a plan appropriate to whatever your specific situation is. Whether your heirs or beneficiaries are bad with money, are underaged, are disabled or have any special issues that makes the creation of an inheritance plan trickier, our firm has the knowledge to help you to find the right legal tools.
To find out more about how we can help you with protecting your assets after you have made a financial gift to a loved one, join us for a free seminar. You can also give us a call at 860-548-1000 or contact us online to get personalized advice from an estate planning lawyer on your specific situation. Give us a call today.