estate planning 91024You bring your children into the world with love. You raise them with love. If you’re going all the way as a parent, you also create an estate plan to safely pass on your legacy of love as well as your assets. But does your plan simply leave your assets outright, so they pass directly to your children all at once? Or are they protected via a trust?

A trust is a must if you’re looking for true protection when passing on assets. Just as you protect your children from harm while you raise them, you can also protect them from any threat that could come from irresponsible behavior or external risk. The safest choice is to place the inheritance in a trust.

Trusts can be designed to protect assets from things like bankruptcy, creditors, lawsuits and even divorce. No one is immune from making a few mistakes during their lifetime, but that shouldn’t have to cost them their inheritance. If your child has a marriage that dissolves, for example, their future inheritance can be safely tucked into a trust, separating those assets from marital property and rendering them untouchable by an ex-spouse.

You can also set up a trust to distribute an inheritance according to your own wishes and for specific purposes, such as education, starting a business, maintaining a family vacation home, or whatever will benefit your children the most.

Gifting a large sum of cash to a 21-year-old is not usually considered the best practice. Many parents leaving assets in trust choose to stagger distributions at certain age milestones, which helps children learn to manage their assets over time with the help of a trustee. Then, at a later age, the child can become the trustee with full control when they have the knowledge to make better financial decisions.

If your child is still a minor or has special needs, a trust is even more critical. Under the law, minors cannot inherit outright, so a trust is necessary to safeguard the assets for their benefit until they reach the age of maturity. The trust preserves assets for their benefit, names a trustee to oversee distributions, and does not disqualify them from receiving special government benefits like an outright inheritance would.

Inheriting in trust provides substantial benefits that an outright inheritance does not. Look into the benefits of setting up a trust for your children. It can be one of the best things you do for them as a parent.

All the best to you and your family,
Signature - Marc

estate planning 91024While most parents have the best intentions when it comes to teaching their children about handling finances wisely, sometimes the lessons don’t take. In addition to concerns about spendthrift behavior, some children experience substance abuse or have mental issues that make giving them access to wealth a problem. This is where a trust can be a parent’s best friend.

Trusts allow you to put controls on the distribution of your wealth. For example, you could elect to make partial distributions at predetermined ages throughout a child’s life, or select a trustee who will make the decisions on regular intervals of asset distribution. A trustee may also be a good choice to manage the assets and make investment decisions that are better suited for those with the professional capacity to do so.

Trusts can also protect your heirs from a future divorce or creditors. In the case of a special needs child, a trust can be set up to provide supplemental financial support that doesn’t disqualify them for important government benefits.

One of the most commonly used trusts is a revocable living trust, where you transfer assets into a trust that you control while you are still living.

After your death, those assets pass to your heirs outside of probate (an unnecessary, expensive and totally public court process). This helps your heirs avoid the hassle and cost of going to Court and doesn’t tie up the assets, which are generally frozen during the probate process unless protected by a trust.

Setting up a trust happens in three, equally important phases. First, the trust must be drafted to meet your family’s unique needs and achieve your specific goals. Then, your assets MUST be retitled in the name of the trust. And finally, since trust laws are changing all the time (not to mention your assets, financial holdings, and family situation) it is necessary to review your trust regularly to ensure it remains up to date, continuing to protect your assets and your family for the rest of your life.

And just like the proverbial stool, unless all three phases of a trust are handled correctly, it will fail. Unlike many estate attorneys who only focus on the first phase of trust planning, I lead my clients through all three phases so they can ensure a legacy of love and financial security for their families, no matter what.

If you would like help planning for the safe, successful transfer of wealth to your family’s next generation, call me.

All the best to you and your family,
Signature - Marc

Asset Protection 91024The perfect gift for your child or grandchild on the occasion of their birth, Bar or Bat Mitzvah, Sweet 16 or Quinceañera cannot be found in any store. Instead, the hopes and wishes you have for your child’s (or grandchild’s) future can best be expressed with a gift of security, resources and a foundation of love – the establishment of a wealth creation trust.

When a new child is welcomed into the family or a child turns 13 , 16, graduates from college or has another milestone event, it is not uncommon for grandparents or other family members to want to give that child a monetary gift.

In most cases, a check written to the parents, or perhaps to the child, and put into a custodial account at the bank. The problems with this type of gifting are several:

1. Often, the parents cash the check, commingle the funds into the family accounts, and even though intentions are good, the child never gets to see the benefit (you’d be surprised how often this happens);

2. The money is put into a custodial account, the child accesses the account at 18 (or perhaps 21) and uses it to buy a car, fund a backpacking trip, or even buy a house; but the decision about how to utilize the money is made without thought or foresight for the future and oftentimes the money is squandered;

3. The money is used to pay for college, counting against the child for purposes of financial aid, effectively squandering the money;

4. The money is used by the child after he or she is married, commingled with the assets of a spouse and lost in a divorce, squandered.

But, there is a far better way, which is good for your family members who want to make gifts, good for you as the parents of your child, good for your child, and great for the world.

Establish a Wealth Creation Trust for your child (or grandchild) as a birthday (or birth) gift and let everyone in your family know that all gifts for the child should be made out to the Trustee of the [Name of Child} Wealth Creation Trust.

Then, when your child gets to be an age specified in the Trust, he or she can step into the role of Co-Trustee, learning how to operate the Trust and best utilize the funds in the Trust. He or she will be trained on the best types of investments for the Trust (my recommendation is first and foremost self-care, well-being programs and entrepreneurial training for the child, and then one or more entrepreneurial ventures the child is involved in) which have the possibility of doing a lot of good in the world and earning a healthy return on investment in the form of appreciation and purposeful, aligned work by the child.

Your child will learn the purpose of the Trust (to encourage the creation of wealth from one generation to the next, rather than the squandering or wasting of assets); how to protect it (keep the investments in the name of the Trust, regardless of how funds are used, so always title investments properly and sign on behalf of the Trust); and how to create more wealth in the future using the Trust assets.

Now, the gift you created when your child was just born, or achieved a specific life milestone becomes not just a vehicle of financial security, but education and impact for a lifetime and beyond.

Gifts up to $14,000 per year (in 2014) per person can be made into such a Trust for your child without the need to file a gift tax return.

If you would like to learn more about how to establish a wealth creation trust to secure the financial future of your children, grandchildren and beyond while encouraging and educating them to create more wealth in the world (rather than squandering what you’ve worked so hard to create), contact my office for a Family Wealth Planning Session.

Do you think trusts are only for the wealthy? While it is true that wealthy Americans commonly use trusts to protect and pass their wealth, there are a number of important reasons Americans of modest means should consider the use of trusts, too. Here are 7 of them:

1. Control distribution of assets. You probably wouldn’t just hand over your car keys to a child who has had no proper preparation for driving, and chances are you won’t want to hand over all your assets to a teenager either. But if both parents were to die without a trust, the children would inherit ALL the family assets upon their 18th birthdays. A trust, on the other hand, allows you to specify not only how, but when you want your children to inherit assets.

2. Protect assets from creditors. Placing an inheritance in a trust ensures that those assets are protected from your heir’s — or because California is a community property state, their spouse’s – creditors. A Lifetime Asset Protection or Wealth Creation Trust can accomplish just that.

3. Protect inheritance from spendthrift heirs. Not everyone is manages their money well. If your heirs are part of this group, a trust can be used to ensure the assets are not squandered due to spendthrift behavior.

4. Protect inheritance for children of a prior marriage. A trust can be useful in both providing for your current spouse and children, as well as any children from a previous marriage.

5. Provide for a special needs heir. Leaving assets outright to someone with special needs might disqualify them from receiving important government benefits. Don’t fall into that trap! By leaving assets in a trust you can bypasses this risk.

6. Avoid probate. With a trust, assets can pass to heirs without going through probate, saving beneficiaries the financial and emotional drain of a lengthy court process. Probate is expensive, public, and also completely unnecessary. Use a trust to keep your family out of court during their time of grieving.

7. Protect privacy. Once a will is entered into probate, it becomes a matter of public record and open season for creditors and predators. A trust, on the other hand, is a private document that can be administered between your heirs and their attorney, protecting your family’s privacy.

If you would like more information about how a trust can be used to protect almost ANY American family, call our office today to schedule a time for us to sit down and talk. We normally charge $750 for a Family Wealth Planning Session, but because this planning is so important, I’ve made space for the next two people who mention this article to have a complete planning session at no charge. Call today and mention this article.