With advance planning, you can protect your loved ones from potential 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 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.
You can also make sure the assets will stay in your family and not go to an in-law.
For instance, let us assume Bradley is not married and has one child named Sara who is married to Michael. Sara and Michael have Bradley's only grandchild, Sampson.
Sara is a medical doctor with a busy practice. Bradley does not like Michael. Also, he thinks Sara and Michael might divorce someday. Bradley wants to leave everything he owns to Sara. He also wants to make sure that if something happens to Sara, that Sampson will get the assets he left to Sara.
In all events, Bradley wants to ensure Michael will not get his assets.
If Bradley has a simple will that says Sara is to get everything, Sara could easily lose the inherited family property by 1. poor money management, or 2. if Sara becomes disabled and Michael is appointed guardian by the court and he squanders the money, or 3. if Sara and Michael divorce and the court rules Michael is entitled to half Sara's assets (including the family property Bradley left to Sara), or 4. if Sara is sued for medical malpractice and the claimants recover some or all of Sara's assets (including the family property Bradley left to Sara).
If, however, Bradley left his assets in a "spendthrift trust" for Sara'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 Sara became disabled, Michael would not be able to squander that money. If Sara and Michael divorced, Michael would not share in the assets Bradley left to Sara. They would be protected because they were in trust.
Also, if Sara were sued for medical malpractice and found liable or decided to settle, the claimants would not share in the assets Bradley left to Sara.
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. mwinnesq.com