A primary concern when estate planning is the potential inability of beneficiaries to manage inherited assets responsibly. To address this, you can utilize tools like a Spendthrift Trust, which allow for greater control over how and when assets are distributed. Trusts can be structured to provide beneficiaries with regular income, limit access to lump sums, or even require that funds be used for specific purposes. Please continue reading as we explore the benefits of a Spendthrift Trust and how a skilled Washtenaw County Trusts Attorney can assist you in establishing this document.
How Does a Spendthrift Trust Work?
If you have concerns about a beneficiary’s ability to manage money responsibly, one option to help safeguard these assets is to establish a Spendthrift Trust. A Spendthrift Trust is an estate planning tool that shields assets from creditors and the beneficiary’s potential mismanagement. With this type of Trust Fund, the beneficiaries’ access to the trust assets is restricted, preventing them from directly accessing or controlling the funds. Instead, a trustee has the authority to manage distributions according to your wishes.
How Do I Establish One?
If your beneficiary has shown signs of financial irresponsibility and you have decided to establish a Spendthrift Trust, it’s crucial to understand the steps involved in this process. Generally, the first thing you’ll want to do is consider the specific amount that each beneficiary will receive. Next, you must define the frequency and manner in which the beneficiaries will receive their distributions. You can opt for regular, fixed payments, such as a monthly stipend, or you can structure the distribution based on specific events or milestones, such as the beneficiary reaching a certain age or completing their education. It can be tailored to meet specific needs.
A fundamental aspect of creating a Spendthrift Trust is appointing a trustee. This individual or entity is responsible for managing and administering the trust’s assets. The trustee has a fiduciary duty to act in the best interests of the beneficiaries and to adhere strictly to the terms outlined in the trust document. Given the significance of the trustee’s role, it’s imperative to select someone trustworthy and responsible.
As you can see, a Spendthrift can be useful when you have concerns about a beneficary’s financial prudence or when you want to control how and when assets are distributed. At Collis, Griffor, & Hendra, we are prepared to help safeguard your assets and ensure your loved ones are provided for. Connect with our firm today to learn how we can guide you through this complex process so you can achieve peace of mind regarding the future.
