You 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 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. We can help you plan for the safe, successful transfer of wealth to the next generation. Call your Newport Beach Trust and Estate Planning attorney at Meier Law Firm today to schedule your Achieve Your Dreams Planning Session, where we can identify the best strategies for you and your family to ensure your legacy of love and financial security.