A few months ago, we had existing clients, Bill & Margaret come in for a review of their trust and other documents. Their concerns and questions were not so much related to their documents as they were centered around their middle aged daughter who had recently remarried. They explained they felt a certain amount of discomfort or even distrust of the new son in law, who by the way had no gainful employment. Their daughter was an only child and would be heir to about a half a million dollars at the death of her parents. Their question was simple “how can we protect our daughters inheritance?”
Answer = Legacy Trust
Keeping Your Assets in the Family
As is the case in most wills, the majority of people who set up revocable and irrevocable trusts leave their assets outright to their beneficiaries, such as children, when they die. So, what’s wrong with that? Well, there may be a better way.
Instead of leaving your assets directly to your beneficiaries, why not leave them to your beneficiaries’ Legacy Preservation Trusts, which gives the “benefits of the assets” to your children while protecting the assets from outsiders, such as creditors, spouses, and in some cases estate taxes.
You can create a Legacy Preservation Trust naming your child both as trustee and beneficiary
when you die. A Legacy Preservation Trust has a set of rules for managing assets for the benefit of your children as beneficiaries. The rules may be broad or narrow.
Reasons to Create a Legacy Preservation Trust
There are a number of good reasons to create trusts for your children today. Just as you’ve
learned about the benefits of a trust, undoubtedly your children will wish to avail themselves of the same opportunity one day. But in the case of your children, there are a number of additional benefits to leaving assets to them in their own Legacy Preservation Trust.
These are:
- The assets left to your children will be protected from their spouse in the event of divorce;
- The assets left to your children will be protected from their creditors in the event of financial hardship, and
- You can be assured that any IRA distributions to you children will be maximized and not lost to lawsuits, divorce or foolish spending habits.
- Upon your child’s death, the unused assets Will go to the beneficiaries you choose instead of the in-laws or others.
Legacy Preservation Trusts can provide that, during your children’s lifetimes, your children have access to the income and the principal in their trusts for their health, education, maintenance and support – so that you’re not giving them a “gift with strings attached: or “ruling from the grave.” But, when your child dies, you can arrange of the unused portion of their inheritance to go to other beneficiaries, such as your grandchildren. You may also choose to have younger beneficiaries be restricted to receiving benefits for health and education only.
For more information, please call our office today 800-798-5297
