If you’re like most people, you may assume that having a Will in place is all the estate planning you need. While a Will is a great starting point, it’s imperative to understand that there are a number of estate planning tools you can rely on to help ensure your assets and Beneficiaries are protected after your passing. One such option is ideal for those who are worried about the spending habits of inheritors, is a Spendthrift Trust. If you’re unfamiliar with how this works and the benefits it can provide, you’ll want to keep reading. The following blog explores these matters in further detail and explains the importance of working with a Medina County, Ohio Trust preparation lawyer to assist you in establishing this document.
How Does a Spendthrift Trust Work and What Are the Benefits?
One of the main concerns many have when estate planning regards the spending habits of their Beneficiaries. When you leave assets in a Will, they are transferred in full to the beneficiary after the conclusion of Probate. This means your 19-year-old grandchild could come into a considerable amount of money all at once. Unfortunately, if they do not have the best judgment or spending habits, this can be cause for concern.
However, one option to help protect these assets is to establish a Spendthrift Trust. This is a type of Trust Fund that allows for the incremental release of funds from the Trust to beneficiaries.
One of the primary benefits of this option is that it helps prevent unwise spending, as they won’t be able to spend all of the funds at once. This can be ideal for those who have a history of money management problems and younger adults who may not know the importance of smart spending.
You’ll also find that this can help offer protection from creditors. If your Beneficiary is sued by creditors, the money held in the fund will not be subject to seizure as part of the lawsuit. This is because the funds are not part of their estate, as they are held by the Trustee.
How Do I Establish One?
If you wish to establish a Spendthrift Trust, it’s imperative to understand the steps involved in this process. Generally, the first thing you’ll need to consider is who the Beneficiaries of your Trust are and how much you would like to leave them. Next, you can determine how much of the funds they should receive and how often they will receive them. For example, you may decide to give them $1,000 each month until the fund is depleted.
Next, you’ll need to name a Trustee. This person is responsible for managing the Trust according to the terms and conditions you’ve established. Your Trustee will be responsible for distributing the funds to the Beneficiaries, so naming someone trustworthy and responsible is critical.
If you are ready to establish a Spendthrift Trust, it’s critical to connect with an experienced attorney first. Unfortunately, many are unaware of the provisions surrounding these Trusts, and failure to adhere to them can result in your Fund being deemed invalid by the state. As such, working with an experienced estate planning attorney is critical in these matters. At Krause Law, our team understands how important it is to protect your assets and loved ones, which is why we are ready to help you during these matters. Contact us today to learn how we can guide you through this process so you can achieve peace of mind.
