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Preserving and protecting your money via a spendthrift trust

| Nov 5, 2020 | Estate Planning

You love your children and have so unconditionally even though you sometimes question the choices they have made throughout their lives. But that is what often happens in parenthood. However, one of those choices has remained a sticking point with you. And that has been their casual attitude toward money.

There has plenty of it in your household, attributed to a successful and lucrative career, solid money-managing skills and good investments. And you want to ensure that your children inherit your assets after you die. How can you achieve this? With the help of an effective and unique tool known as a spendthrift trust, which protects, preserves and hands down your money to beneficiaries.

Protects the money from creditors, themselves

A spendthrift trust protects your money from both creditors as well as the beneficiaries themselves. Distributions are made in gradual increments to beneficiaries so that they will not get the inheritance in one lump sum. Why choose this estate planning route?

Well, maybe you just do not trust the way your beneficiaries handle money, because they spend it frivolously on unnecessary and expensive items. Or, perhaps your beneficiary has a problem with substance abuse or gambling. You do not want them to blow the inheritance, so you set up a spendthrift trust.

In another scenario, beneficiaries may be in deep debt with creditors. As much as a beneficiary wants to dip into that spendthrift trust, he or she cannot in order to pay off creditors.

Considered an irrevocable living trust, a spendthrift trust is managed by a trustee from its inception through even after the grantor – the person who has created the trust — has died. This is one of the areas where a spendthrift trust differs from other trusts, which cease operation after the grantor dies and all assets get distributed. Assets remain in the spendthrift trust.

A spendthrift trust can protect your legacy and money, while helping your heirs as well as preventing them from making poor decisions that harm them.