A trust may be a powerful estate planning tool if you are hoping to avoid probate and retain control of your assets. When structured properly, it may prevent beneficiaries from squandering their inheritances or using funds in a manner that you don’t agree with. Ultimately, you can feel good that your New York home, a car or other property will be used in an effective manner after it is transferred.
The spendthrift clause
Adding a spendthrift provision to a trust provides you with the opportunity to limit how assets are distributed. For instance, you could say that your son gets half of his inheritance the day that you die and the rest over a period of 10 years. You could also say that your daughter or grandchild will receive monthly payouts because you feel that they would be easier to manage compared to a lump sum. It is possible to add provisions for emergency payments or allow for distributions to make a down payment on a home or to pay for school.
Protect beneficiaries from creditors
One of the key benefits of a spendthrift trust is that the trust itself owns any property that has yet to be distributed. Therefore, it generally cannot be claimed by creditors or other parties for any reason. This may be something to consider during an estate planning session if you are concerned about a family member’s spending habits or are worried about assets being lost in a divorce.
In addition to protecting assets after you die, a trust may make it easier to manage your affairs while alive. A revocable trust may be altered at any time, and as the trustee, you maintain control over trust assets unless you die or are rendered incapacitated for any reason.