Most people who set up wills & trusts leave their assets outright to their children in equal shares when they die. So, what’s wrong with that?  Well, there may be an alternative if you are concerned about protecting the inheritance you will leave them.

• What happens if your son is divorced?  Will his spouse get everything, including what you left your son?
• What if your daughter has money problems?  Will she lose the inheritance to her creditors?
• If something happens to your child, do you want any unused inheritance to go to your blood grandchildren rather then to their spouse, in-laws or others?
• Do you want to make sure that your children use the proceeds from your IRAs in the smartest way possible (stretching the IRA rather than blowing it all now)?

Instead of leaving your assets equally to your children, why not leave it to your children’s trusts, which you can create here and now?

You create the Legacy Trust today, as settlor(s), naming your child as trustee and beneficiary when you die. So, for example, if your daughter was Mary Jones, the trust would read Mary Jones, as Trustee of the Mary Jones Legacy Trust”.  Normally, a Legacy Trust is funded at the death of the settlor(s).

These trusts provide that, during your children’s lifetimes, they have complete access to the income and the principal of their trusts — so that you’re not giving them a “gift with strings attached” or “ruling from the grave”. But when your child dies, you would like the unused portion of their inheritance to go to your grandchildren. If the grandchildren are under age 30, the funds are held in trust for them until then, with the Trustee (usually one of your other children) using so much of the assets as may be needed for their health, education, maintenance and support. If one of your children dies without leaving children of their own, then the trust funds go to their surviving brothers and sisters.

The reality of the Legacy Trust is that it is much easier for your child to keep assets separate from their spouse when these assets are left to them in trust. On your death, all of your assets are retitled directly from your trust to your children’s trusts. There is a world of difference when a child can say to their spouse “my parents left this money to me in a trust” compared to their receiving the inheritance “in hand” and having to take active steps to keep those assets separate from their husband or wife.

We look at it this way, if you’re going to leave it all to them anyway, why not use a small portion of the inheritance to do some good planning for them today? Not only will they greatly appreciate what you’ve done for them, but it will get them on the right track of planning for themselves and their families. If you would like to discuss whether the Legacy Trust makes sense for you and your family.