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Are you concerned that some of your beneficiaries might squander their inheritances or simply aren\u2019t equipped to handle the financial responsibilities that come with large sums of money? You don\u2019t have to hold on to your assets until the day you die with the hope that your heirs will change their ways by that time. Instead, consider using a spendthrift trust that can provide protection, regardless of how long you live.<\/p>\n
As with other trusts, a spendthrift trust may incorporate various tax benefits, but that\u2019s not its primary focus. Indeed, this trust type can help you provide for an heir while protecting assets from his or her potentially imprudent actions.<\/p>\n
Spendthrift trust in action<\/strong><\/p>\n Generally, a spendthrift trust\u2019s assets will consist of securities such as stocks, bonds and mutual funds, and possibly real estate and cash. The appointed trustee manages the assets.<\/p>\n The terms of the trust restrict the beneficiary\u2019s ability to access funds in the account. Therefore, the beneficiary can\u2019t invade the trust to indulge in a wild spending spree or sink money into a foolhardy business venture. Similarly, the trust assets can\u2019t be reached by any of the beneficiary\u2019s creditors.<\/p>\n Instead of having direct access to funds, the beneficiary usually receives payments from the trust on a regular basis or \u201cas needed\u201d based on the determination of the trustee. The trustee is guided by the terms of the trust and must adhere to fiduciary standards.<\/p>\n Be aware that the protection isn\u2019t absolute. Once the beneficiary receives a cash payment, he or she has full control over that amount. The money can be spent without restriction.<\/p>\n Role of the trustee<\/strong><\/p>\n Depending on the trust terms, the trustee may be responsible for making scheduled payments or have wide discretion as to whether funds should be paid, and how much and when. Designating the trustee is an important consideration, especially in situations where he or she will have broad control.<\/p>\n Although it\u2019s not illegal to name yourself as trustee, this is generally not recommended. More often than not, the trustee will be an attorney, financial planner, investment advisor or someone else with the requisite experience and financial acumen. You should also name a successor trustee in the event the designated trustee dies before the end of the term or otherwise becomes incapable of handling the duties.<\/p>\n Other key considerations<\/strong><\/p>\n There are several other critical aspects relating to crafting a spendthrift trust. For example, will the trustee be compensated and if so, how much? You must also establish how and when the trust should terminate. The trust could be set up for a term of years or termination may occur upon a specific event (such as a child reaching the age of majority).<\/p>\n Finally, try to anticipate other possibilities, such as enactment of tax law changes, that could affect a spendthrift trust. A word to the wise: This isn\u2019t a do-it-yourself proposition. We\u2019d be pleased to assist you when considering a spendthrift trust.<\/p>\n \u00a9 2023<\/em><\/p>\n <\/body> Are you concerned that some of your beneficiaries might squander their inheritances or simply aren\u2019t equipped to handle the financial responsibilities that come with large sums of money? You don\u2019t have to hold on to your assets until the day you die with the hope that your heirs will change their ways by that time. […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[7,9,10],"tags":[8,11,12],"class_list":["post-16538","post","type-post","status-publish","format-standard","hentry","category-articles","category-estates","category-news","tag-articles","tag-news","tag-updates"],"_links":{"self":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16538","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/comments?post=16538"}],"version-history":[{"count":1,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16538\/revisions"}],"predecessor-version":[{"id":16539,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/posts\/16538\/revisions\/16539"}],"wp:attachment":[{"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/media?parent=16538"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/categories?post=16538"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sfw.cpa\/news-and-guides\/wp-json\/wp\/v2\/tags?post=16538"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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