Keeping
Your Assets in the Family —
The Inheritance Trust
As is the case with most wills, the majority of people who set up revocable and irrevocable trusts leave their assets outright to their children in equal shares when they die. So, what’s wrong with that? Well, there may be a better way.
Instead of leaving your assets equally to your children, why not leave it to your children’s trusts, which you can create here and now?
The Inheritance Trust is created by you, today, as grantor, naming your child as trustee and beneficiary when you die. So, for example, if your daughter was Mary Jones, the trust would read Mary Jones, as Trustee of the Mary Jones Trust”.
There are a number of good reasons to create trusts for your children today. Just as you’ve learned about the benefits of a trust, undoubtedly your children will wish to avail themselves of the same opportunity one day. But in the case of your children, there are a number of additional benefits to leaving assets to them in trust.
These are: (1) the assets will be protected from their spouse in the event of divorce (2) the assets will be protected from their creditors in the event of a financial hardship, and (3) on your child’s death, the unused assets will go to your blood relatives (usually grandchildren) instead of in-laws or others.
These trusts provide that, during your children’s lifetimes, they have complete access to the income and the principal of their trusts -- so that you’re not giving them a “gift with strings attached” or “ruling from the grave”. But when your child dies, you would like the unused portion of their inheritance to go to your grandchildren. If the grandchildren are under age 30, the funds are held in trust for them until then, with the Trustee (usually one of your other children) using so much of the assets as may be needed for their health, education, maintenance and support. If one of your children dies without leaving children of their own, then the trust funds go to their surviving brothers and sisters.
An additional benefit is that, as a client of the firm, we are pleased to offer these trusts to you at a fraction of the cost it would be to your children if they were to go out and set these trusts up for themselves either now or many years later when they receive their inheritance.
Disclaimer — This web site is intended, but not promised or guaranteed, to be correct, complete or up-to-date. It is not intended to be a source of legal advice; thus the reader should seek out specific advice, based on the reader's age, assets, state of health, etc. from competent counsel. Ettinger Law Firm does not intend links on this web site to be referrals or endorsements of the linked entities.