What if you could leave your wealth to your children knowing it would be protected, for the rest of their lives, from their own bad decisions as well as any malicious intent by outsiders? Well, you can.
There are proactive estate planning solutions designed to safeguard your adult children’s inheritance. And these planning protections aren’t just for the extraordinarily rich—even relatively modest amounts of wealth can be squandered or taken if not adequately protected.
Indeed, the planning strategies we describe here can safeguard your child’s inheritance from being depleted by events such as a divorce, a catastrophic medical expense, an at-fault accident, or even a simple mistake. You just never know what life has in store for your heirs, and our planning protections can ensure their inheritance is protected from practically all potential threats—even those you could never possibly imagine.
Big money can cause big problems
“Big” money is relative. What might be a modest inheritance to a 50-year old could be an enormous windfall to an 18-year old. And there are stories upon stories of heirs being negatively impacted by inheriting too much money at a young age. These cases occur quite often, and no matter how well adjusted your children or grandchildren may seem, there’s just no way to accurately predict how their inheritance will affect them.
One unique planning vehicle designed to prevent the potential perils of outright distributions is a Lifetime Asset Protection Trust (LAPT). These trusts last for the lifetime of their respective beneficiaries and provide them with a unique and priceless gift. With an LAPT, for instance, the beneficiary can use and invest the trust assets, yet at the same time, the trust offers airtight asset protection from unexpected life events, such as a lawsuit or serious debt, which have the potential to wipe out their inheritance.
Help your heirs handle their inheritance
When drafted properly, an LAPT can be used to educate your beneficiary on how to handle their inheritance. This is done by allowing the beneficiary to become a co-trustee with someone you’ve named at a specific age or stage of life, and then the beneficiary can become the sole trustee later in life, once he or she has been properly educated and is ready to take over.
The LAPT is discretionary, which
means that the trust would not only protect your heir from outside threats,
like creditors and ex-spouses, but also from their own mistakes. The trustee
you name holds the trust’s assets upon your death. This gives the person you
choose the power to distribute its assets to the beneficiary at their
discretion, rather than requiring him or her to release the assets in more
structured ways, such as in staggered distributions at certain ages.
Your direction and guidance are paramount
Many of our clients choose to provide guidelines directing the trustee on how the client would choose to make distributions in many different scenarios, such as for the purchase of a home, a wedding, the start of a business, and/or travel. Some clients choose to provide guidelines around how their successor trustees should make investment decisions, as well.
Meet with your Personal Family Attorney to see if a Lifetime Asset Protection Trust is the right option for protecting your family wealth and loved ones from situations and circumstances (no matter what they may be), which are simply impossible to foresee. Don’t have a Personal Family Attorney? Contact us today to get your questions answered.
Dedicated to empowering your family, building your wealth and defining your legacy,