Many families opt to use a Revocable Living Trust as part of their estate plan to keep their family out of the cumbersome probate process, but what are some other benefits of trusts in your estate planning? In my opinion, one of the greatest benefits of trusts is the protection that they can provide to your family.
You see a trust can be used, not just to provide instructions for the handling of your children’s inheritance while they are younger, but rather, the trust can potentially provide a lifetime of protection for your children (and even future grandchildren)!
Let me give you an examples of the types of provisions and protections a carefully drafted trust could provide:
- If you pre-decease your spouse, you can leave the assets in trust such that they are available for your spouse’s use and needs, but also protected in the event that your spouse ever remarries—thus ensuring that when you spouse dies, any remaining assets still go to your children rather than the new spouse.
- You could name a trustee to manage the assets for your minor children and provide that trustee with guidance about the use and management of the assets for your children—including guidance about paying for education, visitation with extended family, and similar.
- The trust might instruct the trustee to arrange for your child to take a basic budgeting or financial management course before your child takes over control of their own trust.
- The trust might specify at what age your child has partial or full spending access to the trust.
- The trust can be designed so that your child’s inheritance is protected in the event that your child ever gets sued, files for bankruptcy, becomes disabled, or goes through a divorce.
- The trust can include “bloodline” protection so that if your child dies, the assets continue to be held in trust and managed for the benefit of your grandchildren, rather than going to your child’s spouse.
You can truly build a fortress with a trust.
Now, I know that while your children are young, it can seem a little crazy to already be thinking about things like future potential divorces when they are adults, but the idea is that if the unthinkable were to happen to you, this protection needs to already be in place!
How happy would you be if your future son-in-law or daughter-in-law walked out the door with half of your child’s inheritance during a divorce? Unfortunately, young beneficiaries can be all the more susceptible to these issues as they enter adulthood.
Free Guide for Parents with Minor Children:
If you have minor children, make sure you check out our free guide, on Children's Safeguard Planning, that covers the unique issues involved in estate planning when you have minor children, including naming guardians and protecting their future. Or, contact us to discuss the best way to get started at 919-443-3035 or via our contact form.
