Did you know that you can protect an inheritance from beneficiaries that might overspend? That you can protect an inheritance from going to unintended beneficiaries? Properly drafted Trusts are powerful tools to ensure your assets pass to the right people, and those same Trusts can be used to moderate spending in those beneficiaries that need financial guidance.
Imagine for a moment the tragic situation of your hard-earned assets passed to the wrong person. Say that you were to name your daughter as the beneficiary on your Roth IRA and 401(k) accounts, as well as your house and other investments. Your intent is for her to benefit from the assets, not her husband. Nj.com’s recent article entitled Can I protect my daughter’s inheritance from her husband explains that certain Trusts can be used to this effect much more effectively than simply naming her as beneficiary on those accounts. In this example, you can create a trust to receive the assets, thereby protecting your daughter’s receipt of property from your son-in-law as well as to provide guidance if she lacked financial acumen.
Be aware that not all trusts are the same, and not all trusts will protect an inheritance in this manner. Many trusts simply distribute funds outright, and free of trust to the beneficiaries.
Trust must be drafted carefully and with intent. Please tell your estate planning attorney that you want to protect an inheritance, so that the discussion can begin. There are many options for such Trusts.
Deciding the terms and condition of the receipt of trust property should be discussed. It is common for trusts to contain language restricting the use of assets for certain goals. Often, clients will restrict use of trust assets to health care expenses, education, or reasonable maintenance and support. Others may want to have only a percentage of the assets distributed each year, say 10% per year over ten [10] years. Many other options are available to protect an inheritance.
You also should take care in deciding on who you choose as a trustee. Be aware that the trustee is responsible for managing funds, bookkeeping and following the terms of the trust. In order to promote family harmony, professional trustees should be considered for a restrictive trust rather than family members.
By careful planning,
Reference: nj.com (July 21, 2020) Can I protect my daughter’s inheritance from her husband
