If you have a child who is not good with money or owes a lot of money to creditors, you might have a a justifiable concern that any money you leave to them in a will or trust will be quickly blown or disappear into the bank accounts of the creditors. However, this should not stop you from leaving assets to your irresponsible child. An attorney can devise a trust for you that will protect your assets from your child and their creditors.
Like most states, New York provides for trusts that allow for a trustee to have sole discretion over how the assets of the trust are used for a beneficiary’s benefit. These are known as spendthrift trusts. If your child has no control over the money in the trust, their creditors cannot make a valid claim against the assets in the trust. The trustee only has to give your child enough of the trust assets to meet immediate needs.
Spendthrift trusts need to be specifically set up. If you are considering whether it is a good idea to leave money to an irresponsible or indebted child, speak with an experienced estate planning attorney to have a spendthrift trust drawn up to protect your assets after you pass away