Not All Trusts are Created Equal – Understanding Asset Protection Trusts
Asset protection planning isn’t something you can put off until something bad happens. Like all planning, to be effective, you must have asset protection strategies in place well before something happens.
Most lawyers will advise you to put the assets you’re leaving your kids in a revocable living trust—and this is the right move. But most lawyers will structure the trust to distribute those assets outright to your children at certain ages or stages.
And if you’ve used an online do-it-yourself will or trust-preparation service like LegalZoom® you will most likely be offered only two options: outright distribution of the entire inheritance to your kids when you die, or partial distributions when they reach specific ages and stages as described above. Either of those options leaves their inheritance—and your hard-earned assets—at risk. Indeed, once assets pass into your child’s name, all of the protection previously offered by your trust disappears.
Say for example, your daughter receives her inheritance and later gets a divorce. Despite what you might think, those funds are fair game to her future ex-spouse in a divorce settlement. Once your assets have been inherited by your child outright, they are no longer protected.
There’s no way to foresee what the future has in store for your kids—these kinds of events happen to families every day. And that’s not even taking into consideration that your kids might simply blow through their inheritance and spend it all on unnecessary luxuries. Lifetime Asset Protection Trusts are specifically designed to prevent your hard-earned assets from being wiped out by such risks. And at the same time, your children will still be able to use and invest the real estate and funds held in trust as needed.
Proper planning can protect your family’s legacy. If you are ready to create a comprehensive plan to protect your family, visit LawMother.com/go to schedule a complimentary 15-minute call.