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Consider funding a spendthrift trust for your heirs

On Behalf of | Jan 25, 2022 | Estate Planning |

If you are weighing your estate planning options, a spendthrift trust can be very useful during your lifetime and beyond. While not everyone will need this type of trust, spendthrift trusts have many advantages.

Don’t let the name deter you from exploring this asset-protection trust. It has many benefits of which you may be unaware.

Avoiding probate is always good

The probate process is not swift. It typically takes a year to probate an estate. During that time, your intended beneficiaries may be struggling financially. But if you fund an irrevocable spendthrift trust during your lifetime, the ones you love can quickly gain access to disbursements from the trust.

Trusts are private

If you don’t want your estate plan to become a matter of public record after your death, you’ll be encouraged that spendthrift trusts remain private matters between your beneficiaries and the trustee.

The trusts can rarely be breached by others

If you have a beneficiary whose job makes them likely targets of malpractice lawsuits or other legal actions that could drain the trust’s principal, spendthrift trusts can avoid many of these scenarios. While there are some circumstances where a trust is legally breached by the courts, there are far fewer than with many estate planning choices.

Irresponsible financial decisions are prevented

Not everyone has the financial ability to manage a large lump sum of money. For some beneficiaries, unfettered access to large amounts of money is a recipe for disaster. You don’t want to be the catalyst of a loved one’s undoing from drink, drugs or gambling.

Spouses are barred from accessing funds

Since the trustee you appoint manages the funds, a beneficiary’s spouse can’t exert undue influence or otherwise pressure the beneficiary to turn over money to them. Trustees are effective gatekeepers in these situations.

Learning about every available option before making your decision on whether to fund a spendthrift trust is a prudent choice. Most people aren’t aware of all of the possibilities with their estate plans, so the more you know, the more easily you can find something that meets your goals.