During our lives, we are there for our children whenever they need us. It is our job to guide them and exert control when necessary. We teach them life lessons. We give them advice when they are making a big decision. We give them emotional support during a difficult experience. Yes, we even give them financial help in some situations. What happens when we are gone?
There are some estate planning tools in which a parent can still give their kids the controlled guidance they might need into the future. Take for example a child who may have some money management issues. A spendthrift trust is one way to help give your child a gift without worrying that it was cause problems.
Trusts are extremely useful tools in so many ways. Not only do they help avoid certain probate issues, but they can be tailored to fit the needs of an individual situation or even an individual person.
For those with money management problems, a trust can limit the use of the money. For example, it could be limited to education, to use for living expenses, including rent or a mortgage.
There is even one type of trust that can help protect the funds from creditor claims. This type of trust is called a spendthrift trust or one that includes a spendthrift provision. In some jurisdictions, a creditor could intercept the funds that are distributed during the administration of a trust.
If you are considering executing a trust of this type, there are other considerations. Keep in mind that the description in this post is a basic one. Trusts require information, careful drafting and attention to detail that an estate planning attorney in Pennsylvania can provide.
Source: Marco News, "It's The Law: Spendthrift trusts offer protection," William Morris, June 21, 2013