Creating an effective estate plan utilizing a trust is an excellent tool for those considering how to protect and distribute wealth, but sometimes an appealing option can have undesirable consequences. Traditionally, many individuals have chosen specific assets to leave to their adult children, but developments in taxation and estate penalties have made this a less viable option for those seeking to maximize their resources through a well-crafted estate plan.
Many advisors have begun to recommend against leaving assets directly to adult children. Recently, laws across the land have begun to relax concerning how long assets may stay within a trust — a welcome reprieve from long-standing laws stifling perpetuities or “dynasty trusts”.
This is not to say that children should be barred from accessing various assets within a trust, but it does grant some additional layers of protection from such fronts as a litigious former spouse or creditors. When considering which assets to directly leave to an adult child and which to place in the care of a trust, it may be helpful to think in terms of who will ultimately benefit from the asset. A quality estate plan will ideally preserve your hard-earned assets long after you have passed away, so choosing to keep as many of those assets as possible within a trust and not in the hands of more vulnerable individuals is often the best approach for long-lasting wealth.
Crafting your estate plan is one of the most essential actions you can take to preserve your assets for those you love. Sometimes this may mean establishing it in terms that are less emotionally satisfying, but grant greater provision to your loved ones in the long-run. The assistance of an experienced estate-planning attorney can help you make the most efficient, long-sighted choices for protecting and providing for your family and it’s future generations.
Source: Forbes.com, “7 Major Errors In Estate Planning,” Rob Clarfeld, accessed July 11, 2016