Some New York parents may be concerned about leaving a large sum of money as an inheritance for their children. They might be worried because their children are financially irresponsible or simply because it can be difficult sometimes for anyone to suddenly come into possession of a large amount of money. While it is a good idea to discuss responsible financial management with children, a trust may be another way of protecting assets.
Sometimes known as a “spendthrift trust” or “asset protection trust”, this kind of instrument can be created while the grantor is alive or on the death of the grantor. The trustee may have the discretion to distribute funds to the beneficiary, and the trust can also be set up to distribute funds at certain intervals. The beneficiary may be given sufficient funds to live on or for a particular purpose, such as education, without getting access to the principal.
When a trust is the designated beneficiary instead of an individual, there may be other advantages as well. For example, some trusts can offer protection of assets from creditors or in the event of the beneficiary’s divorce.
Even for families who are not wealthy or for beneficiaries who are not irresponsible, a trust may be a useful tool in estate planning. It can give a person substantial control over how assets are used. Trusts can also be created to protect the estate from taxes, promote charitable giving or care for a family member who has special needs without affecting that person’s access to government benefits. Trusts may help ensure that children from previous relationships still get their share of assets in the event of a parent’s death or may safeguard funds for minor children. An attorney can assist in preparing a trust that fits the client’s needs and goals.