New York Estate Planning & Elder Law Blog
Creating a successful inheritance trust is not easy. In some situations even when a family believes that they have created a well-written inheritance trust, they have failed to address a number of complexities including those involving incompetency. This article reviews some of the elements that should be included in an inheritance trust.
# 1 – Appropriate Beneficiary Designations
Appropriate beneficiary designations are a vital part of trusts. Inheritance trusts are created so assets can be passed to a designated beneficiary during that individual’s life and following the individual’s death to any of the person’s children. Additionally, good inheritance trusts are written with the understanding that a situation might arise where a beneficiary is temporarily not able to serve as a trustee.
# 2 – A Beneficiary Will Be Able to Decide The Trust’s Future
In many situations, inheritance trusts contain terms stating that they will be broken into separate trusts following the beneficiary’s death. The best inheritance trusts provide the beneficiary with a testamentary power of appointment, which will give the beneficiary to direct how assets will pass following that person’s death.
# 3 – Trust Protection
The best inheritance trusts contain clauses that provide the authority to make changes to the trust for the benefit of any beneficiary. This includes the ability to modify the terms of the trust. Sometimes, it is even necessary for an inheritance trust to appoint trust protects who are able to make changes to the trust if necessary.
Deciding if an Inheritance Trust is Right for You
There are a number of reasons why it might be a good idea to create an inheritance. In many cases, these trusts allow parents the ability to pass benefits to children, who might not spend assets in an appropriate way if they received it all in a lump sum.
In addition to protecting children, inheritance trusts also enable to trust’s creator to control how assets are passed to the disabled and elderly, who might not be capable of making good financial decisions. Not to mention, beneficiary trusts can be created so that someone will control distributions. This trustee will be given the discretion to make distributions only in the beneficiary’s best interest.
Another substantial benefit offered by inheritance trusts is that they allow trust creators to protect assets from divorce as well as actions by creditors. Other people have discovered that inheritance trusts can play a vital role in second marriages because they allow a person to leave assets to a spouse and dictate who receives the remainder in the event that the spouse either dies or remarries.
Weighed against these advantages is the potential limitation that it can be time consuming and sometimes expensive to create an inheritance trust.
Speak with a Knowledgeable Estate Planning Lawyer Today
Trusts are one of the most complex areas of estate planning. As a result, many people decide to retain the assistance of an experienced estate planning attorney to navigate this process.
If you need help from an experienced estate planning lawyer, do not hesitate to contact Ettinger Estate Planning today to schedule a free initial consultation.