keep it in

By Mark F. Winn CONTRIBUTOR

With advance planning, you can protect your loved ones from their eventual inability, disability, predators 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 from 1. their inability to manage the assets; 2. their eventual disability; 3. predatory spouses in divorce proceedings who try to get 50% of their assets (which could include what were your assets); and 4. their creditors.

This kind of planning can provide you with peace of mind in knowing that what you leave your loved ones will not be carelessly squandered, and will not go to predatory spouses or money-hungry creditors. You can also guarantee that the money will stay in your family bloodline.

For instance, let us assume John is not married and has one child named Jackie, who is married to Gary. Jackie and Gary have John’s only grandchild, Riley.

Jackie is a medical doctor with a busy practice. John does not like Gary. Also, he thinks Jackie and Gary may divorce someday. John wants to leave everything he owns to Jackie, but he doesn’t want Gary to get his assets or control over his assets. Plus, he wants to make sure that if something happens to Jackie, that Riley will get the assets he left to Jackie.

In all events, John wants to ensure Gary will not get his assets.

If John has a simple will that says Jackie is to get everything, Jackie could easily lose the inherited family property in a variety of ways, namely:

1. poor money management,

2. if Jackie becomes disabled and Gary is appointed guardian by the court and he squanders the money,

3. if Jackie and Gary divorce and the court rules Gary is entitled to half of Jackie’s assets (including the family property John left to Jackie), and

4. if Jackie is sued for medical malpractice and the claimants recover some or all of Jackie’s assets (including the family property John left to Jackie).

If, however, John left his assets in a “spendthrift trust” for Jackie’s benefit, with Riley 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 Jackie became disabled, Gary would not be able to squander that money. If Jackie and Gary divorced, Gary would not share in the assets John left to Jackie. The assets would be protected because they were in trust. Also, if Jackie were sued for medical malpractice and found liable or decided to settle, the claimants would not share in the assets John left to Jackie. Our society is litigious, and statistics indicate 50% 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.