One particularly useful tool in the estate-planning tool box is a spendthrift trust. It’s name may make you think that it’s only good for heirs with the tendency to burn through their money. However, spendthrift trusts are actually good financial vehicles for those in other circumstances as well.
Suppose that you have an heir who is married to someone whom you worry might fritter the money you leave your loved one away. By placing the funds in a spendthrift trust, your beneficiary is protected from the free-spending whims of their spouse both during the marriage and also in the event of a divorce.
Preventing your heir from having direct access to the funds that you intend to leave them can also be useful if your beneficiary is in a field like medicine where they could face malpractice litigation or you’re concerned that they might face some other type of lawsuit. The trust is protected from such claims, so that may give both you and your beneficiary peace of mind.
If your intended beneficiaries are still children, you can fund a spendthrift trust for them, too. You have no way of knowing if they will be wise stewards of their resources as adults or fiscally irresponsible. Rather than rolling the dice on the decision, making a spendthrift trust part of your estate plan is a good way to protect the trust’s principal from potential profligate spending habits your beneficiaries could develop as they reach adulthood.
A Miami estate planning attorney can review your options with you to help you decide which type of trust will best serve your interests and those of your beneficiaries.