Living trusts are very versatile, and they provide a number of different benefits. We will look at a few of them in this blog post, with an emphasis on spendthrift protections.
You may have someone in your family who is not particularly good with money. Perhaps this individual has come to you over the years for assistance, and you are concerned about what will happen after you are gone. You could leave this person an inheritance, but what happens if the money is spent too quickly? At some point, the family member could experience true financial hardships.
It is possible to account for this type of situation when you create a revocable living trust. You as the creator of the trust would typically act as the trustee and the beneficiary while you are living. In the trust declaration, you name a successor trustee to administer the trust after your death, and you would name your spendthrift family member as the successor beneficiary.
The trustee could be a person that you know or a corporate trustee like a trust company or the trust section of a bank. If you use a professional fiduciary, the trust will be administered in accordance with professional standards, and there will be no personal heartstrings to tug at.
In the trust declaration, you leave behind instructions with regard to the way that you want the trustee to distribute assets to the beneficiary after you are gone. For example, you could allow for the trustee to distribute the earnings from the trust on a monthly basis while the principal remains intact.
It would be possible to give the trustee the discretion to distribute assets from the principal under certain circumstances.
When you include stipulations such as these, you can go forward with peace of mind. The trust will be in place to provide your family member with support after your passing, but the trustee would have the ability to make sure that your beneficiary has a financial underpinning to draw from for the long haul.
In addition to the spendthrift protections that you can add, a revocable living trust can be of value for incapacity planning purposes. Many elders become incapacitated late in their lives, and you could empower the successor trustee to administer the trust in the event of your incapacitation.
Probate avoidance is another advantage. The trustee would be able to follow your instructions and distribute assets to the beneficiary in a timely manner, because the distributions would not be subject to the process of probate.
If you are interested in creating a living trust, send us a message through this page to request a free consultation: Queens NY Trust Attorneys.