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 Sam and Mabeline have three children whose names are Peter, Paul and Mary. Peter is married to Andrea. 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.
In addition, Sam has one child, Elijah, from a prior marriage.
1. Can Sam and Mabeline make sure Andrea will not get any of what they leave to Peter?
2. Can Sam and Mabeline benefit Mary and also protect her benefits?
3. Can Sam and Mabeline make sure whatever Paul may receive will be protected from a medical malpractice claim if he were sued?
4. Can Sam and Mabeline make sure that if something happened to Peter, his share would be used to benefit Scott?
5. Can Sam make sure that when he and Mabeline are both gone, that Elijah will receive 20% of the assets?
The answer to all five questions above is “Yes.” With some basic planning and careful tilting and designation of Sam and Mabeline’s assets, Sam and Mabeline can accomplish all of the above.
With some variation depending on unique circumstances and unique individual directions, the hypothetical Sam and Mabeline 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 Sam or Mabeline become incapacitated for any reason.
Each should create a trust where 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, Sam and Mabeline’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 and leave assets to their children in a sort of “lock box” (a trust) where they have total control use and benefit of the trust funds. Assets will be protected if the children become divorced or get sued for some other reason, and ensure that when a child passes, assets will go to their children (Sam and Mabeline’s lineal blood descendants) and not the in-law spouse.
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 and elder law planning attorney. mwinnesq.com