Do you have an irresponsible spender among your loved ones? You’re not alone. Nearly every family has at least one member who has trouble holding on to money.
You probably have concerns about what will happen to the monetary gifts you leave behind for these loved ones. Fortunately, estate planning can provide inheritance preservation solutions for the spendthrifts in your family.
Is a spendthrift trust a good remedy?
With this type of trust, you can help control the spending of a loved one even after you die. A spendthrift trust only allows its beneficiary to access a preset amount at predetermined intervals. It helps ensure that their inheritance continues supporting them on a long-term basis.
Here are some advantages that spendthrift trusts offer:
- Creditors cannot take assets held in the trust.
- Heirs cannot access large sums at any one time.
- Assets held in these trusts typically bypass probate.
As you might expect, there are also several drawbacks associated with spendthrift trusts. For example:
- They can be complicated to create and fund.
- They may not help provide money management lessons.
- They can be expensive to maintain, especially for the lifetime of the beneficiary.
The beneficiary you aim to help with a spendthrift trust can challenge it in court. If successful, your efforts will have all been for naught.
Are there alternatives to spendthrift trusts?
One of the best things about estate planning is that it gives you the power to custom-create solutions. Those concerned about how their death may affect the financial lives of loved ones can choose components that mitigate economic risks.
Learn more about your trust options in California, and consider working with a professional experienced in estate planning and asset preservation.