There is no single universal approach to estate planning that is right for everyone. Since there are so many different strategies that can be implemented, you should really discuss your unique personal situation with a licensed estate planning lawyer.
If you make the right choices from the outset, you can go forward with the knowledge that you are going to provide for all of your family members in the optimal manner. With this in mind, we will look at one of the major benefits that you would gain if you use a living trust as the centerpiece of your estate plan.
When you have someone in the family that is not good with money, you are naturally going to have inheritance planning concerns. This individual has probably come to you for financial help over the years, and there will come a time when you simply are not around to provide assistance.
The inheritance that you leave could be squandered very quickly, and your family member would be in a tenuous situation going forward. Many good people are just not ready to handle large sums of money, and this is no great badge of shame.
Under these circumstances, you could provide the appropriate protections through the creation of a revocable living trust.
First, it is important to understand the fact that you do not have to worry about losing control of the assets in the trust. You would be able to act as the trustee and the beneficiary while you are alive and well.
Plus, since the trust would be revocable, you could dissolve it entirely and take back direct personal possession of the property that you conveyed into it.
To account for the events that will take place after your passing, you name a successor trustee and a successor beneficiary. Any adult that is of sound mind that is willing to assume the role can act as the trustee, but it is also possible to use a professional fiduciary like a bank or a trust company.
The idea here is to instruct the trustee to distribute assets to the beneficiary on a limited basis over an extended period of time. For example, you could allow the trustee to distribute investment earnings only so that the principal remains intact for the long haul.
If you assume that the beneficiary will become more mature over time, you can give the trustee the latitude to make larger distributions when the beneficiary meets certain age requirements.
Another layer of protection would be the inclusion of a spendthrift provision. This would protect the principal from creditor claims. However, any distributions that have been made to the beneficiary would be in play.
To understand how it works, you can apply the concept of “stepping into the beneficiary shoes.” The creditor would have the same access to the funds that the beneficiary has, and the beneficiary would not be able to directly touch the principal.
Attend a Free Webinar
We have traditionally held seminars in person on an ongoing basis because we are committed to educating our neighbors about the importance of the estate planning process. Since we are now limiting our interactions with others, we have transitioned into webinars.
There are a number of them on the schedule right now, and there is no charge to attend these sessions. You can visit our webinar page and follow the simple instructions to register for the date that works for you.
Plan Your Estate Today!
If you already know enough to realize it is time to put an estate plan in place, we are here to help. You can schedule a remote consultation if you call us at 310-337-7696. There is also a contact form on this website you can use to send us a message.
- Things You May Need to Update in Your Estate Plan When You Enter Retirement - March 22, 2023
- 10 Estate Planning Tips You Cannot Afford to Ignore - March 21, 2023
- 7 Estate Planning Steps for the Beginner - March 16, 2023