Imagine you don’t have any children who can inherit your estate, except you do have a niece who happens to have a serious spending problem. As soon as she has any amount of money in her hands, she spends it on something irresponsible. Considering that this is your only heir, it’s understandable that you’re concerned. Fortunately, you and your niece might benefit from a “spendthrift” trust.
The word “spendthrift” refers to someone who doesn’t spend his or her money wisely, and is, instead, a wasteful spender. In the context of trust planning, a spendthrift trust allows estate planners to bequeath money to their heirs in a way that protects the heirs from their own poor spending habits. A spendthrift trust can be designed in such a way as to distribute money to the beneficiary in small monthly increments. If there are sufficient assets within the trust to generate a sustainable income, then the trust can even be structured in a way that a trust manager invests the assets in the trust and uses the income to make regular disbursements to the heir.
Another benefit of the spendthrift trust is that creditors will not be able to seize the assets of the trust in the event that your beneficiary gets into debt trouble. Finally, the spendthrift trust will also offer the benefit of privacy with regard to its contents, the nature of its disbursements and its beneficiaries.
If you’d like to create a spendthrift trust as a part of your estate plan, visit our website to explore your legal rights and options.