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DO YOU TRUST A TRUST? NINE WAYS TO USE A TRUST IN PLANNING

Trusts are often a good tool to achieve one’s estate planning. Although this list is not exhaustive, the following are common things to consider:

  1. Protect beneficiaries from lawsuits. If properly drafted, a trust created in your Last Will and Testament or in your own revocable or irrevocable trust will protect your beneficiaries from his or her creditors.
  2. Protection from claims of spouse or former spouse. Outright disposition of assets generally give no protection from a claim of a spouse or former spouse. If a beneficiary (whether the spouse, child or other beneficiary) receives a distribution outright it could jeopardize whom you desire as a beneficiary subsequent to them. Trusts could be used within one’s estate plan to give protection from these possibilities.
  3. Protection of beneficiary from their own spending habits or handling of funds. Some beneficiaries would spend their inheritance as soon as they got it. Other beneficiaries simply make unwise decisions as to investments. A trust can be used to determine when and how much is to be distributed to a beneficiary.
  4. Business continuity. If a business owner is either disabled or dead, a trust can be used so there is no delay in running the business and how the business assets are administered.
  5. Incentive trusts. Whether it is to achieve higher educational goals, financial success, or rewarding good behavior or punishing bad behavior, trusts can be used as a motivational tool for a beneficiary.
  6. Ruling from the grave. A trust can be used to determine not only when and how much a beneficiary is to receive and how the funds are to be invested, but it can also determine who is a remainder beneficiary after the beneficiary passes (which results in probate avoidance).
  7. Tax considerations. Tax issues such as income taxes, estate taxes, charitable planning, gift taxes, capital gains taxes, etc. can be addressed with trusts.
  8. Incompetent or mental disability planning. If a beneficiary is mentally incompetent at the time of inheritance or if the beneficiary is on public benefits, it is best that there be a trust so that someone else can help take care of assets on behalf of the incompetent beneficiary and/or public benefits would not jeopardize public benefits that are “means-tested”.
  9. Beneficiary is a minor. Similar to 8 above, if the beneficiary is a minor or too young to handle assets inherited, a trust is often established for the health, education, maintenance and support of the young or immature beneficiary.

If you are interested in learning more please sign up to attend our free “Estate Planning Essentials” workshops either on Thursday, February 28, 2019 at 1:00 p.m. or Saturday, March 16, 2019 at 10:00 a.m. by calling (214) 720-0102 or signing up online at www.dallaselderlawyer.com.

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