While most parents have the best intentions when it comes to teaching their children about handling finances wisely, sometimes the lessons don’t take. In addition to concerns about spendthrift behavior, some children experience problems with substance abuse or have mental issues that make giving them access to wealth a problem. This is where a trust can be a parent’s best friend.
Control Distribution of Assets
Trusts allow you to put controls on the distribution of your wealth. For example, you could elect to make partial distributions at predetermined ages throughout a child’s life or select a trustee who will make the decisions on regular intervals of asset distribution. A trustee may also be a good choice to manage the assets and make investment decisions that are better suited for those with the professional capacity to do so.
Asset Protection
Trusts can also protect your heirs from a divorcing spouse or creditors. In the case of a special needs child, a trust can be set up to provide supplemental financial support that doesn’t disqualify them for important government benefits.
Probate Avoidance
One of the most commonly used trusts is a revocable living trust, where you transfer assets into a trust that you control while you are still living.
After your death, those assets pass to your heirs outside of probate (an unnecessary, expensive and totally public court process). This helps your heirs avoid the hassle and cost of going to Court and doesn’t tie up the assets, which are generally frozen during the probate process unless protected by a trust.
Since trust laws are changing all the time, it is best to get professional legal advice for the help you need in ensuring your assets are protected for the future benefit of all your heirs.
This article is a service of the Law Office of Keoni Souza, LLC, an estate planning law firm in Honolulu, Hawaii. We don’t just draft documents; we ensure you make informed and empowered decisions about life and death, for yourself and the people you love. That's why we offer a Family Wealth Planning Session, ™ during which you will get more financially organized than you’ve ever been before, and make all the best choices for the people you love. You can begin by contacting our office today to schedule a Family Wealth Planning Session and mention this article to find out how to get this $750 session at no charge.
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