So, John and Mary have spent a good part of their working lives accumulating some property and investments that they wish to pass on to their three adult children. The three adult children are: Sally Jerry and Bobby. John and Mary love them all and they are good kids. Sally has had some problems with creditors in the past. Jerry’s wife periodically tells him she wants a divorce. Bobby makes good money but has a hard time hanging on to it. John and Mary would hate to see their property pass to one of the children only to have it lost to a creditor or divorce process. John and Mary could employ a Trust centered estate plan utilizing a Revocable Living Trust to protect the property passing to each of the children. The Trust could provide that all or a portion of the property passing to each of the adult children will be held by the Trustee named in the Trust who will have the discretion to make distributions to the children. In this way funds held by the Trust on a child’s behalf will be sheltered from creditors or over spending; The distributions made once in the hands of the child would have some exposure depending on timing and decisions made by the child but the bulk of the funds passed to the children would be protected as long as the child had no control over when and how much the distributions would be. Some of the assets passed to the children would have additional protections once passed to the children based upon the type of asset being held on their behalf ( 401k, 403b, life insurance etc.)
Menu
