You have worked hard throughout your life to build up a sizable personal estate that includes real estate investments, retirement accounts, stocks and bonds and other important assets. You want to continue to protect these assets, even after your death. However, you may have concerns about what will happens to those assets after you pass them on to your adult children.
You love your kids. But, throughout their adult lives, they have made a number of financial and personal missteps, including failed business ventures, gambling addictions, drugs, excessive spending, and a series of bankruptcy filings.
So, what do you need to do to ensure that your estate’s assets remain as intact as possible?
A spendthrift trust
A spendthrift trust may be a viable option. It is an estate planning tool that is utilized to prevent your kids, or your beneficiaries, from essentially blowing their inheritance once received.
A spendthrift trust allows your assets to be distributed in increments, rather than all at once. Other provisions may be included in this type of trust, but it will depend on individual circumstances.
After you pass away, the trustee you have chosen to administer the trust is responsible for ensuring your instructions are carried out verbatim.
A spendthrift trust also has another important benefit: its assets usually remain protected from creditors. If a beneficiary of the trust files for bankruptcy or faces a civil suit, the assets will be protected. This is possible because the assets, under the law, belong to the trust.
A spendthrift trust may not be necessary for everyone. However, it does help in certain situations in which the grantor wishes to safeguard their property. Speaking to a legal professional who can help explain its benefits in greater detail is advised.