Asset Protection

Asset Protection

A trust fund is a legal entity established for the purpose of holding assets for the benefit of specific people. Children are frequent beneficiaries of trust funds, because trust funds can safeguard your assets and make sure they are used for your children’s stewardship. One of the primary benefits of having a trust is that the assets held within it are protected from legal claims. With the possible exception of retirement savings, any assets that you have are subject to seizure by courts and creditors. However, assets held in a trust are legally protected.

A trust gives you the ability to name specific beneficiaries, and once you do, your intentions cannot be changed after the fact. This means that you will be able to specifically name your children as beneficiaries of the trust – and even exclude certain children if that is your choice – and your wishes will be carried out.

One of the biggest advantages of a trust is that you have control over how the money in the trust is dispersed to the beneficiaries. You can have it done in a lump sum, or you can have it parceled out over a period of several years. You can even set it up as an annuity to make payments to the beneficiary on any basis that you choose – monthly, quarterly, semiannually, or annually.

You can set the trust up to be dispersed when the child reaches a certain age, say 25, 30, or even 50. That will allow you to delay turning the assets of the trust over to your child until they reach an age at which you believe they will be financially responsible. You can even choose to make monthly or annual payments up to a certain age, upon which the remaining balance of the trust will be issued to the individual in a lump sum.

Though we may not like to think about it this way, if you have a child who has a drug problem, a gambling addiction, or no ability to spend money wisely, putting restrictions on the reasons for which it will be dispersed can be the perfect way to guarantee that the money will be available only for expenditures that will help to improve your child’s life.

Important Notes

Many of our clients choose to leave their children’s inheritance in an Asset Protection Trust to protect it from unwise spending, divorce, bankruptcy, or lawsuit.

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