You have probably spent years building your assets and increasing the size of your estate or business. If you're like many of our clients, you hope your assets and accumulated wealth will provide a lasting legacy to your family after you're gone. 

Trust planning

It's easy to think that all you need to do is draft a Will dividing your assets and trusting your beneficiaries to keep them in the family. Unfortunately, it is usually more complicated. There are many ways your beneficiaries could be forced to dispose of the assets you left them, including a divorce, lawsuits, or bankruptcy. 

However, there are ways to plan for these potential scenarios and keep your assets in the family and away from others. We discuss some of the planning options to help keep your hard-earned assets in the family below:

1. Modern Asset Protection Trust

Many people are under the impression that Asset Protection Trusts are only for the rich and famous and involve complex, off-shore trust havens, but the reality is modern asset protection trusts are flexible and a popular tool for many people. 

One common type of Modern Asset Protection Trust is a Family Protection Trust. A Family Protection Trust transfers assets to your loved ones, so the assets are protected after the transfer from potential lawsuits, creditors, or divorce.

When asset transfers are made outright, as is common when someone only utilizes a Will in their estate planning, the assets transfer to the beneficiary with no restrictions or protections. This means that for the purpose of lawsuits or bankruptcy, and sometimes for divorce, your loved one could be legally required to give someone else your hard-earned assets. With the proper estate planning, let’s put those protections in place now. 

2. Heir Safeguard Trust

An Heir Safeguard Trust ("HST") is specifically designed to protect your surviving spouse or children from future remarriage, lawsuits, creditors, or divorce. An HST can be used with a Testamentary Trust, Revocable Living Trust, or Irrevocable Trust. The different ways to set up an HST allows for clients with varying budgets to establish HSTs. 

The Heir Safeguard Trust is also used to provide bloodline protection. With a "simple" Will, you might leave things equally to your children when you die. But what happens when your child later dies? Those assets will often pass to your child's spouse.

The Heir Safeguard Trust allows you to bypass your son-in-law or daughter-in-law and set the funds aside for grandchildren. Depending on the circumstances, you might still consider naming your son-in-law or daughter-in-law as Trustee on behalf of the grandchildren, but the HST makes it clear that the funds are only to be used for the grandchildren's benefit. This can be especially important if your son-in-law or daughter-in-law should remarry or have more children.

3.  Qualified Personal Residence Trust

A Qualified Personal Residence Trust ("QPRT") is an irrevocable trust that holds the Trustmaker's primary residence or vacation home as its only asset. You may have a vacation home that you built or purchased with the dream that your loved ones would continue to use it after you are gone, or you may have a homestead that you would like to pass on to someone in your family. Either way, a QPRT may be a great option for you to transfer that property later on. 

A QPRT would allow you to keep the right to live in residence or use the vacation home for a fixed number of years. While the property transfer to the QPRT is a taxable gift, if you live until the end of the trust term, the value of the residence or vacation property plus any later appreciation will pass to the trust beneficiaries without being included in your taxable estate. 

Want To Learn More About Keeping Assets In The Family?

Feeling overwhelmed trying to sort out your options? Many of our clients have told us that they felt overwhelmed when they first began planning, but with our help, we helped them make sense of the options and design a plan to fit their goals. We've empowered thousands of North Carolina residents to take complete control of their future with customized estate planning and long-term care planning solutions.


To get started, call us at 919-899-2606 or contact us online, and we’ll schedule a free consultation today. If you’re not ready to take the next step, we recommend registering for one of our upcoming seminars or downloading our free guide, Estate Planning Pitfalls & How To Avoid Them: Protecting Your Legacy, Lifestyle, and Beneficiaries.

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