You have a lot of options when it comes to dealing with your estate. But as you start thinking through how your assets will be distributed after you’re gone, you might find yourself worrying about how those assets will be used. This is especially true if you have a loved one that you want to take care of but who has either proven or is suspected to be fiscally irresponsible.
This is where a spendthrift trust may be of use to you.
What is a spendthrift trust?
A spendthrift trust is an estate planning vehicle that allows you to place assets in the care of a trustee who will then make periodic payments of a specified amount to a named beneficiary. The assets that remain in the trust, however, cannot be touched by the beneficiary, meaning that he or she can’t withdraw them whenever he or she wants. This ensures that the bulk of the assets will be protected from misuse.
Another advantage of a spendthrift trust is that it protects the assets from the beneficiary’s creditors. This means that regardless of how much debt your loved one falls into, the trust’s assets will be protected. It is worth noting, however, that the payments that are released to the beneficiary from the trust are accessible by creditors.
Choosing the estate planning tools that are right for you
One of the great things about estate planning is that it is a customizable process aimed at meeting your needs. Therefore, think carefully about how you want your assets to be distributed and whether you want any conditions place on the release of those assets.
If you want to learn more about what your options are in that regard, then you may want to sit down with an attorney who is knowledgeable in this area of the law. That way you can rest assured that you’re making the best fully informed decisions that are right for you and your family.