Additional Benefits to a Trust
There are many benefits to having a trust established. This week, let us analyze the option of integrating asset protection language for your children, within your Revocable Living Trust. Traditionally, a Trust would be created to provide for the well-being of our children in the event something happened to us. Let us look at it from the angle of its common usage, and push it one step further within the arena of creditor protection. A Trust can provide for what I term “value promotion” language. For example, should you want to encourage your child to get a college education prior the age of 25, simply provide for an incentive; such as $25,000 upon receipt of his / her diploma to start a business. In the event you want to promote family values, provide that should your child be married to the same spouse for 10 years, then he / she again gets a larger portion of the Trust principal. So these are some of the more common uses of Trust procuration for one's beneficiaries.
Now let's delve one step further. In our day and age, litigation and lawsuit have become part of the average American citizen's life. Especially for parents with young children, it is imperative that certain structures be set-up for their interest and protection. This is often called a Beneficiary Controlled Trust. Here is how it works: For parents who want to teach economic responsibility to their children over time, the goal is to create an economic buffer. A child at 18 will have a much different view of life and finances than when he attains the age of 27. In order to create that economic shield, an option is to have a Trustee which would have a set of directions, also called ascertainable standards; have a guideline to follow and act accordingly for the benefit of your kid. Another hurdle to think about is divorce or business litigation. Once again, we are aiming to ensure the children can get the benefits of your money, but without the burden if you will. The means to achieve that end is to leave the ownership of the assets within the Trust, all the while giving control in the hands of the children. The child can be Trustee or Co-Trustee of that Trust. The most common language is spendthrift provisions, where you provide for the health, education, maintenance and / or support. The cost of such structure is pennies on the dollar when created early enough in your child's life. That small investment can end up saving your children in the hundreds of thousands of dollars. A Revocable Living Trust has the ability to address a breadth of issues which were not possible in years past. Make sure that your notion of estate planning matches that of our day and age. So think about it on a global view, and choose a plan that meets your particular needs and family's unique circumstances.