Whether you are planning to leave property or money to a child or you are the parent or guardian of a minor who has recently inherited anything of value, this article will provide you with everything you need to know.
Money, property or other investments can be left to a minor or adult child in many different ways, and it is up to the benefactor exactly how they want the transaction to take place. The property/ money can be left outright or in trust, and those trusts can be set up in a myriad of different ways, not allowing access until they reach a certain age or achieve a certain goal (such as completing high school or graduating from college). In some cases, a continuing trust can be set up to provide funds through the child’s entire life, and asset protection can be set up by a skilled lawyer in order to ensure that the money is safe over the coming decades.
How can you create asset protection?
Asset protection can be achieved by meeting two requirements:
- No ‘demand right’ by the beneficiary – ‘Demand Right’ refers to language that may be present in the trust that allows the beneficiary to demand money from the trustees. This may mean that the beneficiary has the right to withdraw a certain amount of money when they reach a certain age. For example, if the child has the ability to withdraw 25% of their trust when they reach the age of 30, creditors have the right to tap into their trust in order to repay any potential debt. These debtors can include (but are not limited to): future divorcing spouses, a bankruptcy trustee or even a plaintiff in a lawsuit. This can drain the trust to the maximum amount allowed, and will threaten and/or nullify any asset protection in place.
- Selection of the trustee – There are 2 different kinds of trustees – an ‘interested’ trustee (that is, someone who has an interest in the money itself, such as a first degree relative and those who are working for them) and a ‘discretionary’ trustee. For the best asset protection options, a ‘discretionary’ trustee will be the superior option, as they are less likely to be swayed by pleas and requests from the beneficiary.
How can you set up asset protection?
In order to set up asset protection for a child’s inheritance, you need to seek expert legal counsel to help you with your estate planning. The skilled attorneys at the Law Office of Tyler H. Fair, Esq. are experienced in this area, and they can help you ensure that your precious inheritance will be well protected into the future. Call or email us today.
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