Asset protection is an important consideration when you’re engaged in the process of inheritance planning. In this context we are talking about asset protection as it pertains to the people who will be receiving inheritances from you. Asset protection involves taking steps to make it impossible for claimants to pursue funds that you want to make available to your loved ones after you pass away.
Of course if you give direct bequests and your heirs assume ownership of the assets creditors, former spouses, and other types of claimants can seek to attach their personal property. As a response many people will arrange for the transfer of assets to take place in what could be described as an indirect manner without the beneficiary legally owning the assets in question.
This can be achieved through the creation of what are called lifetime trusts, and they can provide asset protection on multiple levels. When you set up the trust you name a trustee who will manage the funds and supervise distributions to your beneficiary according to the terms that you set forth when you created the trust agreement. Many people utilize a trust company or the trust department of a bank to serve the role of trustee. These entities have the expertise that it takes to maximize the trust’s resources while making sure that your wishes are carried out with regard to providing for the beneficiary.
In addition to protecting assets from claimants, a lifetime trust also ensures a source of long-term financial support for your beneficiary. You never know how someone will handle a large sum of money when they receive it all at once, and even people who are good money managers sometimes make very bad decisions. Sudden market fluctuations can also play a role. So when you use a lifetime trust as your vehicle of asset transfer you are taking the safe route, protecting the resources you’re leaving behind and providing for the long haul.
Mr. Nirenstein is licensed to practice before the courts of the State of Connecticut and the United States District Court. He is a member of the Connecticut and Hartford County Bar Associations, and the Estate and Probate, Elder Law, Business Law and Real Estate Sections of the Connecticut Bar Association.
- IRS Announces Gift and Estate Tax Increases for 2024 - November 23, 2023
- Schedule an Estate Plan Review with the New Year Approaching - November 7, 2023
- Estate Administration: Navigating the Critical First Steps - October 19, 2023
