Protecting Your Adult Beneficiaries With A Discretionary Lifetime Trust

Inheriting a large sum of money can cause as many problems as it can fix. If you are worried that your adult beneficiaries will have a difficult time managing the assets you want to leave to them after you pass away, it can be beneficial to set up a discretionary lifetime trust. These trusts are designed to shield your adult beneficiaries from some of the problems associated with large inheritances.

Here are two benefits your loved ones can enjoy when you make the choice to establish a discretionary lifetime trust.

1. Assets are protected from divorce proceedings.

It's not uncommon for financial problems to lead to a divorce. While many people associate financial problems with a lack of money, inheriting a large sum of money can cause financial problems as well.

Your adult beneficiary's spouse might have strong opinions when it comes to how the money should be spent, and these differences of opinion can cause a marriage to crumble. If you want to shield the assets you leave to your adult beneficiaries from being divided in a divorce, then establishing a discretionary lifetime trust can be helpful.

These trusts don't grant full ownership of the assets to your beneficiary, but rather grant a trustee limited access to the assets on behalf of the beneficiary. This ensures that inherited assets cannot be included in divorce proceedings.

2. Assets are protected from irresponsible financial decisions.

Managing large sums of money is a skill that many people haven't had the opportunity to acquire. If you are worried that your adult beneficiaries will not have the financial savvy it takes to manage the assets you want to leave them, then establishing a discretionary lifetime trust is the best way to protect your legacy.

Working with an attorney, you can determine how your assets will be used after your death. If you want your beneficiaries to spend their inheritance on education, real estate, or weddings, you can stipulate that the trustee can only access the trust to withdraw money for those expenses.

You can easily protect your adult beneficiaries from squandering their inheritance by defining the parameters that will limit access to the assets left in a discretionary lifetime trust.

If you want to ensure that your assets are protected after your passing, you should think about establishing a discretionary lifetime trust. Your adult beneficiaries will be shielded from some of the problems associated with a large inheritance, and you can ensure that you legacy lives on through your assets.

Speak to an estate planning expert to learn more.

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