Trusts can protect and preserve family property


With advance planning, you can protect your loved ones from their eventual inability, disability, predators (e.g., divorce claims, alimony claims) and creditors.

When doing your estate planning, if you leave your assets in a "spendthrift trust" for your loved ones, instead of outright, you can protect them.

You can protect them from:

  1. their inability to manage the assets;
  2. their eventual disability;
  3. predatory spouses in divorce proceedings who try to get 50 percent of their assets; and
  4. their creditors.

This kind of planning can provide you with the peace of mind of knowing that what you leave your loved ones will not be carelessly squandered, and will not go to predatory spouses or money-hungry creditors. You can also make sure the assets will stay in your family and not go to an in-law.

For instance, let us assume Jethro is not married and has one child named Emily, who is married to Michael. Emily and Michael have Jethro's only grandchild, Sampson.

Emily is a medical doctor with a busy practice. Jethro does not like Michael. Also, he thinks Emily and Michael might divorce someday.

Jethro wants to leave everything he owns to Emily. He also wants to make sure that if something happens to Emily, that Sampson will get the assets he left to Emily.

In all events, Jethro wants to ensure that Michael will not get his assets.

If Jethro has a simple will that says Emily is to get everything, Emily could easily lose the inherited family property by:

  1. poor money management, or
  2. if Emily becomes disabled and Michael is appointed guardian by the court and he squanders the money, or
  3. if Emily and Michael divorce and the court rules Michael is entitled to half Emily's assets (including the family property Jethro left to Emily), or
  4. if Emily is sued for medical malpractice and the claimants recover some or all of Emily's assets (including the family property Jethro left to Emily).

If, however, Jethro left his assets in a "spendthrift trust" for Emily's benefit, with Sampson as a remainder beneficiary, these assets would be protected.

An advisor or financial trustee could make the assets grow and protect them from poor management or poor judgment.

If Emily became disabled, Michael would not be able to squander that money. If Emily and Michael divorced, Michael would not share in the assets Jethro left to Emily. They would be protected because they were in trust.

Also, if Emily were sued for medical malpractice and found liable or decided to settle, the claimants would not share in the assets Jethro left to Emily.

Our society is litigious and statistics indicate 50 percent of marriages end in divorce. Leaving assets in trust instead of outright can provide you with the peace of mind you deserve and protect your family and your family property.

Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate and elder law planning attorney.

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