Trust law enables us to create legal structures that guarantee our assets will stay in our family bloodline protected for generations. How?
Let’s assume Jack and Jill have three children whose names are Peter, Paul, and Mary.
Peter is married to Melissa. They have one child whose name is Scott.
Paul is a single successful surgeon. As a surgeon he has substantial exposure to malpractice claims.
Mary is single and is receiving government benefits. Jack has one child from a prior marriage named Elijah.
- Can Jack and Jill make sure Melissa will not get any of what they leave to Peter?
- Can Jack and Jill benefit Mary and also protect her benefits?
- Can Jack and Jill make sure whatever Paul might receive will be protected from a medical malpractice claim if he were sued?
- Can Jack and Jill make sure that if something happened to Peter, his share would be used to benefit Scott?
- Can Jack make sure that when he and Jill are both gone, that Elijah will receive 20 percent of the assets?
The answer to all the questions above is “yes.”
With some basic planning and careful titling and designation of Jack and Jill’s assets, Jack and Jill can accomplish all of the above.
With some variation depending on unique circumstances and unique individual directions, the hypothetical Jack and Jill should leave half their assets to each other protected in trust and direct the remainder to their children in trusts so the assets are protected and stay in the family.
Each of them should have updated South Carolina powers of attorney for health and for finances. This will avoid guardianship and conservatorship proceedings (which can be expensive) if Jack or Jill becomes incapacitated for any reason.
Each should create a trust in which they remain the trustees and beneficiaries at the outset. With the counsel of their lawyer, they should re-title assets into their trusts. The lawyer can help with whose trust assets should go into which trust and why.
When this is done, if the trust papers spell out the terms of a family asset protection trust and trusts for the children, then their plan can work wonders to protect their assets and preserve their legacy.
Of course, Jack and Jill’s trust-based estate plan will keep their affairs private, avoid unnecessary probate costs and legal fees.
It will also protect half their assets from lawsuits during the surviving spouse’s life, leave assets to their children in a sort of “lock box” (a trust) where they have total control, use and benefit of the funds but will be protected if they divorce or get sued, and ensure that when a child passes, assets will go to their children (Jack and Jill’s lineal blood descendants) and not the in-law spouse. In the above example, this is Melissa.
Now, that’s good planning. Good plans just make good sense.
Mark F. Winn, J.D., Master of Laws (LL.M.) in estate planning, is a local asset protection, estate planning and elder law attorney. www.mwinnesq.com