One thing that really hits home when you reach the latter stages of your life and recognize just how final your absence is going to be is the fact you are simply not going to be there when your family needs you. Most people develop a deeply ingrained sense of responsibility that is harder to let go of than anything else, and when you feel this it definitely sheds new light on the importance of intelligent estate planning and its potential for providing long-term financial support.
When you leave someone a direct inheritance these assets become the personal property of that person. Even if this individual is capable of handling a large influx of money without making any horribly bad decisions, the funds are not protected. If someone was to sue this person, or if he or she was involved in a messy divorce proceeding the funds that you left behind could be subject to attachments.
This is something to keep in mind when you are planning your estate, because once you’re gone that safety net that you provided for your family no longer exists. Should their inheritances be taken from them all or in part they may have nowhere to turn for financial support for the rest of their lives.
Many people use lifetime trusts to protect the assets that are being passed along to their loved ones. These trusts are somewhat self-explanatory in that they are intended to provide for the beneficiary for life. Since the beneficiary does not own the assets directly they are not subject to judgments from creditors, former spouses, or other claimants.
Plus, if you choose to have these assets managed by a trust company or the trust department of a bank by naming one of these entities as the trustee you can be sure that there is a steady hand at the financial reins that will act in accordance with your wishes as stated in the trust agreement.
- Taxation of Nongrantor Trusts - October 6, 2021
- Dangers of Do-It-Yourself Estate Planning - September 27, 2021
- CRT: Best Tool for Proposed Tax Changes? - June 9, 2021
