As you go about your estate planning process, you will necessarily think about who you want to be the beneficiary or beneficiaries of your assets. If you are leaving behind money for your children, you have worked hard to earn that money and keep it safe for future generations in your family. If you have a child with poor money management skills, then you might be worried that the money will be spent frivolously. In this blog post, we go over a few ways you can protect estate assets from heirs who might be at risk for depleting assets you leave behind.
Option One: Spendthrift Provisions
One solution to the problem of untrustworthy beneficiaries is creating a trust with a “spendthrift provision.” This kind of provision essentially puts limits on how a beneficiary can use the money he or she inherits in a trust. For example, you can explicitly state that you only want a beneficiary to benefit from a trust if he or she is gainfully employed. You can write that the money is only to be used for specific purposes, such as rent, utilities, or car payments. You can also give restricted deposits so that the beneficiary does not receive too much money from a given payment.
Setting up spendthrift provisions requires specificity in order to eliminate the risk that the provision can be interpreted in ways that are different from how you intended. Contacting a qualified attorney to help create your spendthrift provision is always a good idea.
Option Two: Provide Non-Monetary Assets
A second option that allows you to provide for untrustworthy heirs is leaving behind property that is not money. For example, you could leave behind a house or a vehicle that you think will help your child later in life. You can even put in a provision to your estate documents that the child is not allowed to sell the property for cash, if that is something important to you.
Option Three: Structure a Trust According to Your Goals
Thirdly, structuring your trust according to your goals for your heirs is perhaps the most effective way to protect your assets moving forward. You can, for example, make the trust only available to heirs when they reach a certain age. You can have the money divided over time instead of distributing money in one lump sum. You can also have certain performance indicators (such as getting a job or finishing school) as requirements before your children are able to access the money in the trust.
Thinking through these kinds of decisions can be tough, but with the right set of estate planning attorneys by your side, you can be as thoughtful and thorough in your estate planning process as possible as you plan for your family’s future.
Are You Looking for an Estate Planning Attorney in Texas?
If you have not yet begun your estate planning process, don’t wait – get in touch with a qualified, experienced attorney today that can help you think through your long-term plans. At McCulloch & Miller, PLLC, we offer Texans the highest possible quality representation, because we want our clients to rest easy, knowing their estate planning needs are handled. For a consultation with a member of our team, call today at 713-597-7176. You can also fill out our online form to have someone reach back out to you as soon as possible.