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 Fred and Sue have three children whose names are Fred Jr., Alan and Penny. Alan is married to Jennifer. They have one child whose name is Kevin.
Fred Jr. is a single successful surgeon. As a surgeon he has substantial exposure to malpractice claims. Penny is single and is receiving government benefits.
Fred has one child from a prior marriage named Jon.
1. Can Fred and Sue make sure Jennifer will not get any of what they leave to Alan?
2. Can Fred and Sue benefit Penny and also protect her benefits?
3. Can Fred and Sue make sure whatever Fred Jr. may receive will be protected from a medical malpractice claim if he were sued?
4. Can Fred and Sue make sure that if something happened to Alan, his share would be used to benefit Kevin?
5. Can Fred make sure that when he and Sue are both gone, that Jon will receive 20% of the assets?
The answer to the questions above is “Yes.” With some basic planning and careful tilting and designation of Fred and Sue’s assets, the couple can accomplish all of the above.
With some variation depending on unique circumstances and unique individual directions, the hypothetical Fred and Sue 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 Fred or Sue 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, Fred and Sue’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, but that will be protected if they become divorced or get sued for some other reason. It will also ensure that when a child passes, it will go to their children (Fred and Sue’s lineal blood descendants) and not the in-law spouse. In the above example, this is Jennifer.
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