Protected Inheritances

If you love someone you should consider protecting their inheritance for them from losses to potential catastrophic creditors and from predators such as their divorcing spouses. You may do this by giving them the inheritance in trusts for their benefit. Yet like most of us you want to give each one the right to manage and invest inherited assets along with the right to give themselves distributions as needed or desired by them, rights that may be called the dignity of control.

How To Do It

Your documents can have provisions for the share of a child to be held in a protective trust after your death. Here are the goals:

1. Give maximum dignity of control to your descendants, while you

2. Promote personal responsibility for them and for anyone they marry, and\

3. Protect the estate for them, for as many generations as possible, from:

• Their disability, inability, inexperience, or lack of initiative if they receive too much too young.

• Their own risk of loss to catastrophic creditor claims, meaning lawsuits in our liti-gious society.

• Predators in our society, such as divorcing spouses of your descendants, or spouses of your descendants who survive your descendants and remarry someone outside of your family.

• Death taxes on all amounts that you can make tax-free when you die, for as many generations as you can keep the original amounts and any of their growth in value free from death taxes. (Tax protection is merely a side benefit.)

4. Avoid guardianship proceedings for remote descendants who may be disabled or too young to receive their inheritance on termination of trusts you have created for the benefit of parents of such remote descendants.

The traditional approach used by most attorneys has been to advise clients to give the inheritance in stages based on attainment of certain ages, such as one-third at age twenty-five, another distribution at thirty, and the remainder at thirty-five.

This traditional approach reflects knowledge of risks of dumping any significant amount into the hands of a loved one. However, experience shows that certain risks continue far beyond the normal ages mentioned above. Examples of some of these experiences will be posted on our Facebook page in the coming days.

Our recommended solution is a lifetime trust for each loved one, with them having the dignity of control at an age they may be presumed able to handle such a responsibility.