You’ve spent a lifetime accumulating wealth with the hope of leaving a legacy after you pass away. However, you know your loved ones best and know that, sometimes, simply handing your children or grandchildren a large sum of money or sizable assets is not necessarily the best way to take care of them and leave the legacy you want. Fortunately, with proper estate planning, you can take steps to help protect the legacy you leave behind.
In most families, there are some members who are more stable than others. Perhaps you have a child with an unstable marriage, a spouse who has a substance abuse issue, a grandchild who is notoriously poor at managing money or another loved one whose career situation places him/her at great risk of being sued personally. In each of those situations, you may worry that providing a large, direct inheritance could prove risky or unwise. Spendthrift trusts or Beneficiary Protection Trusts are tools that may be helpful in these circumstances.
A spendthrift trust is a special type of irrevocable trust created for the benefit of a loved one, but not controlled by that beneficiary. The trust is managed by a trustee who is independent of the beneficiary. These trusts often exist in cases where the beneficiary has problems managing money or is otherwise financially unstable. In this way, the trust can allow you to provide for your financially unstable loved one, not just throughout your life, but also for the duration of their life as well.
A Beneficiary Protection Trust is also an irrevocable asset protection trust, but it is controlled by the beneficiary most of the time. However, the beneficiary is removed from control and the trust is locked down if there is an attack on the trust assets by divorce, a lawsuit, etc. This type of trust allows the most flexibility for the beneficiary while offering very significant protections.
Even properly constructed spendthrift or Beneficiary Protection Trusts are not impervious to all potential claims. While a trust may be created in such a way that your loved one’s divorcing spouse cannot claim a right to the trust’s assets in the divorce proceeding, it may not protect the beneficiary against all domestic relations claims. If the beneficiary owes back child support or alimony, Wisconsin law can allow even spendthrift or Beneficiary Protection Trust assets to be used to pay that debt. This can be also true if the beneficiary owes back taxes.
To learn how a complete estate plan, and proper utilization of trusts, may help you leave the legacy you desire, even when your loved ones are less than perfect at handling money, seek the advice of a knowledgeable Wisconsin trust attorney. Madison trust attorney Daniel J. Krause of Krause Law Offices LLC has a long track record of creating a variety of estate and trust plans for all kinds of circumstances. With the help of Attorney Daniel J. Krause, you can obtain a plan to meet your family’s specific needs.
Contact us through our website to schedule your confidential, no-obligation initial consultation.