Protect Your Children w/ an Inheritance Trust
A family inheritance trust can be an essential tool in the estate planning process because they are often necessary to prevent misuse by inheritance beneficiaries. Since inheritance trusts typically do not require court supervision, you can protect your children’s inheritance from their spouse in the event of divorce or your child’s death.
A family inheritance trust (sometimes referred to as an inheritance or dynasty trust) can be defined as a trust created to benefit one’s heirs that protects those heirs against creditors and ex-spouses.
An inheritance trust is irrevocable and must be carefully drafted, with input from legal counsel specializing in this area; however, these trusts give you excellent protection and flexibility once set up correctly.
A Straightforward Discussion w/ Your Child (and in-law) May Not go Well.
While we generally recommend sharing information with your family about estate planning subjects, in this case, it is probably best to hold these conversations to yourself. After all, everyone wants to maintain a good relationship with your child and in-law – for their sake, as well as yours and your grandchildren’s. You don’t want to add any animosity into the marriage whether you like or despise your in-law. It isn’t a great idea to inform them, “We plan to leave a bequest to you, our child, but we don’t trust your spouse and don’t want him/her getting it.”
Some individuals are so concerned about how to address these issues that they postpone them indefinitely. Then they wind up with nothing but a very “vanilla” last will, or nothing at all. The kid will get your inheritance, either way – without any planning to avoid the worst-case scenarios you’ve been dreading.
Using an Inheritance Trust might be the answer to protecting your kids.
There is a way to keep your hard-earned assets in your family; according To ensure that your donation benefits only your children and grandchildren, not the in-laws or their new spouse or kids who aren’t yours, what is the best way to arrange things? Traditional estate planning techniques cannot achieve this, and there is a solution: an Inheritance Trust.
You may safeguard your kid’s inheritance from their spouse in the event of divorce or death while avoiding the uncomfortable “Don’t tell your partner!” conversation with an Inheritance Trust.
You can safeguard your grandkids’ futures and ensure that your valuable assets don’t end up in the hands of relatives. There are two more advantages to using an Inheritance trust. First, if your kid finds themselves in financial difficulty, you may be able to defend their inheritance. Second, it might prevent probate.
How a Moulton Law Inheritance Trust Helps to Keep Assets in Your Family
We will prepare an Inheritance Trust for your children. Each child will have their Inheritance Trust if you have more than one child. The primary beneficiary will be your child, and they will also serve as the trustee of the trust after your death.
The Inheritance Trust will receive everything in your revocable trust and any insurance policies you have upon your death. Upon your death, these assets will go into your child’s Inheritance Trust if you are single or both you and your spouse if married.
Under the terms of the Inheritance Trust, as trustee, your child will have unlimited access to the principal and income during their lifetime.
According to trust provisions, your child is entitled to use the assets for their benefit and the benefit of future generations. This means that your children will never be able to accuse you of “ruling from beyond the grave.”
It also implies that your kid won’t tell their spouse, “I’m not going to share these assets with you.” Instead, your son or daughter can explain that you left money in trust for him or her to use for defined goals and has a legal responsibility to keep the terms of the faith. That’s a far more reasonable explanation than simply saying you didn’t give them any money.
Grandchildren Can Also Be Protected in the Event of Your Child’s Death
An Inheritance Trust allows you to choose the person or persons who will get any money remaining in the trust if your child dies. Grandchildren are usually named as beneficiaries. If your grandchild is still underage when your kid passes away, you should designate a trustee to handle and manage their money until they reach majority age.
If something happens to you, most people choose another of their children as trustees, instructing them to spend the money on the grandkids’ health, education, support, and maintenance. You can even designate the age at which this cash can be paid out to the grandchildren.
Your child, the initial Inheritance Trust trustee, has authority to modify beneficiaries only if one of their children, or another one of your children or grandchildren, is named as a beneficiary.
The Inheritance Trust is authorized to direct that any unspent assets be shared among your blood relatives, usually the deceased child’s surviving siblings and grandkids.
Our experienced attorneys would be pleased to talk with you about how an Inheritance Trust can be used within your estate planning goals. Call us at 509-328-2150 or use our contact page to schedule your estate planning consultation. Interested in learning more about inheritance laws in Washington State? Read this useful article from SmartAsset.