If you have been fortunate enough to be able to accumulate assets that are sufficient enough to provide life-changing amounts of money to your loved ones after you pass away you invariably feel a certain sense of peace of mind when you are planning your estate. Being unable to provide any type of safety net for your loved ones after you pass away would certainly be an unsettling feeling, so you can only feel grateful if this is not something that you need to be concerned about.
But at the same time when you are able to provide significant resources to the next generation and beyond there are oftentimes some concerns. When you have heirs who have been successful in their own right and have a proven track record of being able to handle their own affairs appropriately, you may have no hesitation about simply leaving them their inheritances with no strings attached.
Unfortunately not everyone is especially adept at handling money, and there are those who spend recklessly and somehow wind up in poor business deals on a consistent basis. Spendthrift family members may be best served by inheritances that are delivered in a more measured fashion, and one way that people address this issue is through the creation of spendthrift trusts.
With these trusts you place the decision-making in the hands of the trustee, who will make distributions from the trust to the beneficiary according to parameters that you set forth in the trust agreement. For example, you may set a particular annual distribution that is to be derived from the income that is generated from the trust and allow for emergency distributions at the discretion of the trustee. The spendthrift provisions in the trust agreement prevent creditors and others from seeking redress from the beneficiary from attaching assets in the trust.
Spendthrift trusts are an option that are available to you, and they may provide you with the ideal solution to what could be fairly described as a “pleasant problem.”
- Can I Leave an Inheritance With Strings Attached? - February 2, 2023
- Are These Items Missing From Your Estate Plan? - January 17, 2023
- Advance Property Liquidation Can Streamline the Estate Administration Process - January 3, 2023