If you have an existing estate plan, but would prefer stronger protection of the trust assets from your children’s creditors, now is the time to consider updating your plan. Your will or trust may have called for a simple, outright distribution of your assets to your children when you die. Fortunately, an estate plan modification can change those provisions to provide stronger protection from outside parties.
What considerations should you be making as you contemplate an estate plan update to better protect the trust assets from your children’s creditors?
Following are six examples:
- Consider using an independent trustee who does not stand to benefit from the trust.
- Give your trustee the power to make discretionary distributions of the child’s share of the trust assets rather than an outright distribution immediately at your death.
- Consider staggering distributions over a number of years rather than giving everything to the child at once.
- If you do name the child as a trustee, include provisions that allow the child to resign and appoint an independent trustee in his place.
- Consider keeping the assets in trust until your child passes away, with discretionary distributions permitted for certain reasons. For example, you could permit distributions for the child’s heath, education, maintenance, or support.
- Include specific provisions that address creditors, bankruptcy, and addiction issues.
In addition to these updates to your existing estate plan, your attorney may suggest other, more aggressive measures to safeguard your trust assets from your child’s creditors. To learn more estate plan modifications that may be right for your family, sign up for our free newsletter today. We offer free monthly seminars to help people best choose the options of estate planning that best meet their needs.