After a lifetime spent working hard, saving prudently, and investing wisely you undoubtedly don’t want to see the assets you have accumulated lost after you are gone. Unfortunately, without careful planning those assets could be lost to divorce, bankruptcy, mismanagement by beneficiaries, or even creditors. Using your estate plan to keep assets in the family, however, can prevent all of that if your plan is carefully drafted and well thought out.
Most people think of a Last Will and Testament when they think of estate planning. Your Will can accomplish many things; however, it is often not the best tool for transferring assets to loved ones after your death. The reason for this is that once an asset is gifted in a Will it is gone forever. The beneficiary can do with the assets as he/she chooses with absolutely no oversight. More importantly, assets that are gifted outright are vulnerable to being lost in a number of ways, including:
- Creditors – if a beneficiary gets behind on debts a creditor may have the right to go after assets owned by the debtor and attach a lien to those assets. The family home could be lost to pay off a bad business debt, for example.
- Divorce – whether you like your son/daughter-in-law or not you probably do not intend to give him/her your vacation home in the Caribbean. It could happen though in a divorce if the home becomes co-mingled and is considered a marital asset.
- Bankruptcy – if a beneficiary ends up in bankruptcy court most of his/her assets are vulnerable to being seized and sold by the Trustee.
- Beneficiary – a spendthrift beneficiary could waste assets. A beneficiary who develops a drug or alcohol problem, a gambling problem, or any other type of addiction could also plow through an inheritance in record time.
So how do you protect family assets from any of these unwanted fates? One common way is to create trust agreement and transfer all your heard-earned assets into the trust. The trust can then be managed by a professional Trustee to ensure the assets are safe. Loved ones can be beneficiaries of the trust, receiving monthly or yearly disbursements. The trust can also include discretionary disbursements for emergencies or extra expenses such as college. The important point is that the family assets remain safe while loved ones receive the benefits of those assets. Talk to your estate planning attorney about whether or not a trust agreement would be a beneficial addition to your estate plan.
If you have additional questions or concerns about trust agreements, contact the experienced Missouri estate planning attorneys at Amen, Gantner & Capriano, Your Estate Matters, LLC by calling (314) 966-8077 to schedule an appointment.