
Like most seniors, you have worked hard to get where you are financially. And
you want to make sure that your heirs receive everything that you had planned to
leave them. To accomplish this, you may have even established a trust to reduce
transfer costs and possibly shelter taxes. But what will happen once your loved
ones receive their inheritance?
Will they invest it wisely for the future or quickly spend it all? Or will angry
creditors line up at their door to get paid? An additional special clause within your
trust may possibly assure that the assets that you pass to your beneficiaries will
last as long as you had wished.
A spendthrift clause prevents trust beneficiaries from voluntarily or
involuntarily transferring current or future rights in the trust. Without this,
beneficiaries have unrestricted ability to use the assets, and thus their creditors
can attach those funds. State laws determine the exact language and the degree
of creditor protection spendthrift trusts offer. Nevertheless, the concept restricts
the beneficiaries access to the trust's property.
The trustee whom you select is usually given the discretion to distribute
money as needed to the beneficiaries. This may be an ideal choice for a
beneficiary who is financially irresponsible and likes to spend. Or you may want
to provide for a loved one who has special physical or mental needs.
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