Inheritance planning is a two-way street. On the one hand you have to prepare your assets for distribution. Depending on the size and scope of your resources and the various forms that they happen to be in this can require a number of different steps to mitigate your estate tax exposure and limit asset erosion.
On the other hand, you would also do well to consider the personal characteristics of the people who will be receiving inheritances from you.
There are those who are not especially adept at handling money, having a tendency to burn through financial resources quickly. There may in fact be someone in your family who fits this description. As a result, you may be concerned about this proclivity when you are drawing up your estate plan.
A step that you could take that would protect this individual from his or herself would be to create a spendthrift trust. You make your heir the beneficiary, but he or she does not have direct access to the principal. You leave the financial administration of the trust in the hands of a trustee of your choosing. This could be a professional entity, such as the trust section of a bank or a trust company.
In this manner you protect the assets from the beneficiary’s creditors and they receive distributions from the trust, which is being professionally managed, according to your wishes as set forth in the trust agreement.
To learn more about spendthrift trusts, simply contact a good Long Island estate planning attorney to arrange for an informative consultation.
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