Inheritance Trusts to Keep Assets in the Family
We call this “multi-generational planning”. Whereas with a will your estate plan usually dies when you do, with an Inheritance Trust your wishes will go on for thirty, forty or even fifty or more years after you are gone, i.e., for two generations instead of just one.
These trusts provide that, during your children’s lifetimes, they have complete access to the income and the principal of their Inheritance Trusts – so that you’re not giving them a “gift which strings attached” or “ruling from the grave”. But when your child dies, you would like the trust assets, which may have grown considerably, to go to your grandchildren. If the grandchildren are under age thirty, we recommend that the funds be held in trust for them until such age, 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.
Keep in mind that, without an Inheritance Trust, if your son or daughter dies, the entire inheritance you have left may go to a son-in-law or daughter-in-law who may later get remarried and share your hard earned assets with a complete stranger. Nevertheless, some clients would not want to disinherit their son-in-law or daughter-in-law. In such cases, the Inheritance Trust, or a portion of it, may be set up to continue for your in-law’s lifetime, providing them with the “income only” so that if they get remarried or end up in a nursing home, the assets are still protected and will still go to your grandchildren, after the son-in-law or daughter-in-law dies.