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 Luke and Laura have three children whose names are Derek, George and Mary.
Derek is married to Betty. They have one child, Jack. George is a single successful surgeon. As a surgeon he has substantial exposure to malpractice claims. Mary is single and is receiving government benefits due to a disability.
Luke has one child, Elijah, from a prior marriage.
1. Can Luke and Laura make sure Betty will not get any of what they leave to Derek?
2. Can Luke and Laura benefit Mary and also protect her benefits?
3. Can Luke and Laura make sure whatever George may receive will be protected from a medical malpractice claim if he were sued?
4. Can Luke and Laura make sure that if something happened to Derek, his share would be used to benefit Jack?
5. Can Luke make sure that when he and Laura are both gone, that Elijah will receive 20% of the assets?
The answer to all the questions above is “Yes.”
With some basic planning and careful titling and designation of Luke and Laura’s assets, Luke and Laura can accomplish all of the above. With some variation depending on unique circumstances and unique individual directions, the hypothetical Luke and Laura 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 Luke or Laura 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, Luke and Laura’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 trust funds. Those funds will be protected if any of the children become divorced or get sued for some other reason, and ensure that when a child passes, it will go to their children (Luke and Laura’s lineal blood descendants) and not the in-law spouse. In the above example, this is Betty.
Now, that’s good planning. Good plans 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